For investors seeking yield, safety, and growth, today’s market presents a critical decision point. With bond yields falling, four plus potential cuts to the federal funds rate by year-end, and savings accounts offering minimal returns, real estate stands out as an asset class worth considering for its attractive, tax-efficient, and stable yield relative to the alternatives. By examining current data, historical trends, and the unique advantages of real estate—we can see why many are rethinking their allocations. Here’s what the numbers and forecasts tell us.
The State of Bonds and Interest Rates
As of early April 2025, the 10-year U.S. Treasury yield has dipped to approximately 3.9%, down from 4.8% earlier this year, reflecting market expectations of a slowing economy and anticipated monetary policy shifts1. Meanwhile, the federal funds rate still sits at 4.25%–4.5%, but updated forecasts now project four to five rate cuts over the next 12 months, potentially lowering the range to 2.25%–3% by April 20262. This dovish outlook, driven by softening economic data, contrasts with earlier caution around inflation.
Sources: Federal Reserve, Morningstar, Chicago Mercantile Exchange. Data as of 03/28/2025
Newly announced tariffs—a 10% baseline on imports, 34% on China, and 25% on Canada and Mexico—are adding complexity. The National Association of Home Builders (NAHB) has raised concerns about the 25% tariffs on Canada and Mexico, which supply nearly 25% of U.S. building materials, including lumber, steel, gypsum, and aluminum3. Since January 2021, material prices have already surged over 30%, and these tariffs could further increase costs, slowing both residential and multifamily construction3. Industry analysts like CBRE, Commercial Edge, and S&P Global Ratings project that these tariffs, which took effect this week, will negatively impact commercial real estate by inflating construction costs4. The NAHB warns that higher costs will likely be passed on to buyers through increased housing prices, exacerbating the ongoing housing shortage and affordability crisis, while supply chain disruptions could hinder rebuilding efforts in disaster-affected areas3. While this may raise general prices—potentially nudging inflation higher—falling commodity prices, particularly oil, steel and lumber, may neutralize some inflationary impact from the tariffs. Oil prices have dropped significantly in recent weeks, which could keep inflation in check and help to offset the negative impact of tariffs on the consumer5. There are numerous opposing forces to the supply-demand equation, and it will be some time before the dust settles.
Multifamily Real Estate and Real Yields
Historically, multifamily real estate has been one of the safest sectors due to its necessity-based profile and generally rising rents. It’s been one of the toughest environments for this sector in the last three years due to higher interest rates and an oversupply of units, but with interest rates falling and very little new supply on the horizon, the tailwinds are slowly forming for a real estate resurgence. Even if growth doesn’t materialize in the short term, investors are still rewarded by the attractive tax-efficient yields in this sector while they wait for the existing supply to get absorbed.
The high interest rates investors enjoyed in 2023 and 2024 are disappearing quickly and it’s important for any investor to constantly evaluate market opportunities and look for repositioning opportunities that generate the highest risk-adjusted returns and find them before the ‘crowd’ enters the space.
Our IncomePlus Fund was designed for the moderate-risk, income-seeking investor. It’s a diversified fund that invests only in multifamily real estate across the Sunbelt markets. Today, it boasts a tax-efficient distribution yield of 6.5%6, significantly beating the yield on treasuries, corporate bonds, and savings accounts. Plus, with inflation expectations over the next five years now standing at 2.06%, corporate bonds and treasuries barely outpace inflation on an after-tax basis7.
| Pre-Tax Yield | After-Tax Yield | Real Return After Inflation | |
|---|---|---|---|
| Ten Year Treasury | 3.94% | 2.5% | 0.42% |
| Corporate Bonds (MSACBY) | 5.25% | 3.3% | 1.25% |
| IncomePlus Fund | 6.50%6 | 6.1% | 4.01% |
The chart above assumes a 37% tax rate on bonds and treasuries and that only 90% of the IncomePlus Funds Distribution yield is shielded by depreciation. The IncomePlus Fund generates a real yield that’s almost ten times that of treasuries and close to three and a half times more than corporate bonds. While real estate investments typically carry more risk, the IncomePlus Fund’s portfolio is heavily invested in preferred equity, a debt-like position making up more than 50% of the fund’s portfolio. This gives the fund a distinct advantage over many real estate funds when it comes to navigating the turbulence of the current environment and delivering a stable return to investors. Additionally, the premium in yield over corporate bonds and treasuries more than adequately compensates investors for the additional risk.
Lessons from 2020: Low Rates and Real Estate
History offers a useful lens. In early 2020, the Fed slashed the federal funds rate from 1.58% in February to 0.05% by April, per Federal Reserve data, in response to the COVID-19 crisis8. This flood of cheap capital sparked the early stages of a real estate surge. Multifamily rents climbed as housing demand spiked, and property values in many markets rose 20%–30% from 2020 to 2022, according to RealPage analytics9. Low rates drove investors to real assets, compressing cap rates and boosting returns.
Today’s environment isn’t a carbon copy, but it shares similarities. A projected drop to 2.25%–3% in the federal funds rate over the next year suggests borrowing costs will ease, potentially reigniting interest in real estate10. When rates fall, capital tends to flow toward assets with higher yields and inflation-hedging potential—attributes bonds and savings accounts struggle to match. This dynamic could set the stage for real estate to shine again.
Multifamily: A Track Record of Resilience
Real estate’s appeal isn’t just about yield; it’s about stability. Multifamily properties, in particular, have a history of weathering economic turbulence. During the Great Recession (2007–2009), occupancy rates stayed above 90%, per Newmark Research, and annual returns averaged 6.5%6, according to the NCREIF Property Index11. By contrast, the S&P 500 plunged nearly 40%, and 10-year Treasuries yielded just 2%–3%12. Even in the milder 2001 downturn, multifamily posted positive returns while other assets faltered. Today, the NAHB’s concerns about tariffs highlight a potential slowdown in new construction due to rising material costs and supply chain disruptions. Roger Yang, U.S. industry leader at KPMG, notes that in regions like the Sunbelt, tariffs on steel and lumber, combined with rising insurance costs, could significantly inflate multifamily project costs, potentially making some developments financially unviable and tightening supply even further13. Eventually, lower supply should drive occupancy and rental growth for existing properties.
Why the durability? Housing is a necessity, not a luxury. People need places to live, regardless of economic conditions. This demand underpins cash flows, making multifamily a safer bet than many assume. For investors, this stability—paired with yields that often exceed fixed income—offers a compelling alternative.
A Strategic Pivot
Real estate isn’t a one-size-fits-all solution, but the data makes a strong case. With yields like the IncomePlus Fund’s 6.5%6, tax advantages, and multifamily’s proven resilience, it’s an asset class that merits attention in 2025. Bonds and savings accounts have their place, but for those seeking income and growth without excessive risk, real estate offers a path worth exploring. Where you allocate today could define your returns tomorrow.
If you have a comment about this article or want to learn more about Origin, feel free to schedule a call with our investor relations team.
- Trading Economics, 2025
- Federal Reserve, Morningstar, Chicago Mercantile Exchange. Data as of 03/28/2025
- NAHB, 2025
- CBRE, 2025
- Crude Oil, April 4, 2025
- The net distribution yield is as of 01/31/2025 and is calculated as the (January 2025 distribution divided by the latest Fund net asset value) divided by the (31 days in the month divided by 365 days in the year). Returns are not guaranteed. Past performance is no guarantee of future results. All investments involve a degree of risk, including the risk of loss.
- Y-Charts, April 4, 2025
- Federal Reserve, 2025
- RealPage, 2025
- Morningstar, 2025
- Neumark Research, NCREIF, 2025
- Neumark Research, 2025
- GlobeSt, 2025
