February 2023 – The Beginning of a New Real Estate Investment Cycle

The Investment Environment

As we entered 2022, the market was behaving as rocket ship heading to the moon.  In stepped the Fed with meteoric series of interest rate hikes that increased the Federal Funds Rate 4.5% driving the markets in a state of disarray.

The Result?   An adjustment of nearly 30 percent in valuations in publicly traded Multifamily REITs.  The next level of liquidity, open-ended, non-traded REITS, received a staggering $12.2 billion in redemption requests forcing industry titans like Blackstone and Starwood to impose gates.

Looking back we knew that the almost 12-year run of easy money, compressing cap rates and ever increasing valuations would one day stop.  Real estate has always been cyclical and 2022 marked the end of a great bull run.

Last Month in Essential Realty Partners

The major lesson Essential’s leadership has learned during their four decades of operating in market cycles is to be greedy when others are fearful – but at the right time.   It usually takes 8-12 months for pricing to reset at the beginning of a new cycle.  

 Our pipeline systems have identified and are tracking onto the most promising acquisition targets getting ready to pull the trigger.  Our marketing and capital partners are gearing up for a big year as we pursue a new national portfolio build during this window of opportunity over the next 24-36 months.