By Troy Marek, Regions Real Estate Capital Markets
As we embark on the second half of 2025 amidst some economic uncertainty, there are two bright spots within real estate. Both the multifamily and the seniors housing/healthcare sectors boast strong fundamentals and occupancies. RealPage data indicates 138,302 apartment units were absorbed in the first quarter, and NIC MAP data shows a seniors housing occupancy increase to 87.4 percent, or 621,000 occupied units over the same period. This suggests strong demand in both critical housing sectors, at the same time new supply is slowing.
Interest Rates Drive Lending Activity
Agencies Freddie Mac, Fannie Mae and HUD remain the primary loan providers supporting these two asset classes today. Unsurprisingly, interest rates heavily impact lending activity. Since the Federal Reserve decided to hold rates steady in May, sector experts have been closely watching employment and inflation data, as well as tariff impacts, as all three have the power to influence the Fed to lower rates later this year. With the Federal Reserve deciding to hold rates as-is in June, industry players will continue to keep an eye on the data.
Once rates are brought down some, perhaps later this year, multifamily and seniors housing/healthcare lending volume will likely see a spike. Proof of this occurred in early April when the 10-year Treasury rate dropped, resulting in loan deal flow surging and borrowers taking advantage of attractive rate locks.
Financing Apartments
Apartment property owners financing or refinancing their communities via Freddie Mac and Fannie Mae loans today prefer short-term, five-year loans. Once rates stabilize in the low 4 percent area, seven- or 10-year loan options will likely be the preference. That said, some borrowers are selecting seven- or 10-year loans with flexible pre-payment options today, as these allow them to refinance based on the loan’s back-end structure.
Notably, both agencies are innovating loan offerings to increase loan availability for good sponsors with sound credit. Both are enhancing lease-up (i.e., near-stabilization) programs and capturing deals earlier in the property’s lease-up phase, when occupancy is slightly lower than is historically required for loan eligibility. The agencies are also utilizing 35-year amortization more frequently. Typically used with “Capital A” affordable deals, it is now applied commonly in the conventional loan space with the right sponsors.
Financing Seniors Housing/Healthcare
In seniors housing/healthcare, the dramatic increase in unit demand from aging baby boomers gives the agencies (as well as alternative lenders such as life companies) more appetite to finance properties. This is a positive for owners/operators.
However, many are concerned about the lack of seniors housing/healthcare supply and an inability to house older Americans in coming years. New construction projects face ballooning costs and high barriers to entry across many U.S. markets. As a result, rehabilitation and enhancement of existing communities over the coming years will likely spike.
Planning for Success
While both multifamily and seniors housing remain strong real estate classes, players in these sectors will be monitoring policy shifts, interest rates and the overall performance of the economy as they plan for success. Increased certainty, when it comes, is expected to boost multifamily and seniors housing/healthcare even further.
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About the Author
Troy Marek is head of Real Estate Capital Markets for Regions Bank, a nationwide multifamily and seniors housing real estate lender. Visit Regions Real Estate Capital Markets online at https://www.regions.com/commercial-banking/real-estate-banking/real-estate-capital-markets.
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