Origin Investments: Volatility and Uncertainty Tied to Middle East Conflict and Tariff Policies/Roll-Out Dominate an Otherwise Predictable First Half of 2025

CHICAGO, July 10, 2025 /PRNewswire/ -- Looking in the rearview mirror at predictions experts made for multifamily investments in 2025, the bullseyes widely outnumber the surprises. In reviewing the 2025 predictions he made in December, David Scherer, Co-CEO of Origin Investments, said nine of 10 are playing out as expected. However, because of significant but unpredictable geo-political issues with potentially far-reaching consequences, he revised one prediction.

Despite the presence of uncertainties and new challenges, Scherer reiterated his belief that multifamily investment opportunities remain a very strong option.

"I still believe 2025 is the beginning of a significant bull cycle for multifamily real estate," he said. "The fundamentals of the sector point to great opportunities moving forward. We're seeing strong rent growth, steady demand and absorption, and a dwindling pipeline of new deliveries coming online. Further, as a country we still have a significant housing shortage."

That long-term positive outlook aside, two geopolitical issues are impacting the global financial and investment markets: the conflict in the Middle East between Israel and Iran, and the level and volatility of President Trump's tariff policies and execution plan.

"These are events that no one could have predicted," Scherer said.

Unpredictable

Tariffs: Entering 2025, President Trump telegraphed his intentions to levy tariffs against trading partners and Scherer predicted that tariffs could increase construction pricing by 3% to 5%. Yet the size and scope of the tariffs and the overall process appeared arbitrary. Often it changed on an almost daily basis and wreaked havoc on foreign and domestic financial markets.

"Even though the president led a protectionist-themed campaign, few expected the size and magnitude of his 'Liberation Day' policies or the way they were executed," Scherer said. "Volatility creates uncertainty, which is the greatest deterrent to investing, for individuals and businesses."

Middle East Conflict: As unpredictable as the announcement and execution of the tariff policy was, even more surprising was the escalation of hostilities between Iran and Israel that led to the U.S. bombing of nuclear sites in Iran. As an almost immediate result of the conflict, the per-barrel price of oil climbed by 15% and has shown volatility.

"I don't know where that ends," Scherer said. "But oil going from $60 to $72 a barrel pretty quickly is effectively a tax on the consumer. I wouldn't have anticipated that. No one would have."

A Minor Adjustment

Interest rates will hover … a little higher:  In December Scherer predicted interest rates in 2025 would "stay within the 100-basis point range from 3.75% to 4.75%based on expectations that substantial rate cuts were unlikely, even though inflation dipped closer to the Fed's goal of 2%."

However, because of stubborn inflation, steady and prolonged rent growth, and certain Trump policies that are making it harder to control inflation, Scherer is revising the starting point of the range upward by 25 basis points to between 4.0% and 5.0%.

Scherer went even further, suggesting that he believes there is greater risk the rate would meet or exceed 5%.

"If I miss on this new one, it will be because the 10 year note yield, not the Fed funds rate, moves to 5.25%," Scherer said. "I would give more weight to the upside tail, that if the rate moves higher, it won't just go to 5.0%, it keeps going." (As of June 9, the 10-year yield was at 4.4%.)

On Track

Predictions by Scherer for 2025 that are on track at mid-year include:

• Positive year-over-year rent growth accelerates in 2H2025 and continues in 2026.
  
  
• Realized losses in all real estate loans will accelerate over 2024.
  
  
• Debt funds will continue to be a major source of RE financing.
  
  
• The spread between homeownership and renting will moderate but stay at current levels.
  
  
• Multifamily sales activity will tick up but stay low relative to the 2021-22 peak.
  
  
• Construction costs will be impacted by tariffs.
  
  
• Property insurance will normalize to an inflationary growth rate.
  
  
• Affordability will become an increasing issue.
  
  
• QOZ law will be extended.

The complete 2025 Predictions piece is available on Origin's website.

About Origin Investments
Founded in 2007, Origin Investments is a private real estate manager that helps high-net-worth investors, family offices and registered investment advisors grow and preserve wealth by providing tax-efficient real estate solutions through private funds. We build, buy and finance multifamily real estate projects in fast-growing markets throughout the U.S. In 2023, we founded affiliate firm Origin Credit Advisers, an SEC-registered investment adviser that provides yield-focused multifamily debt investments for qualified purchasers. SEC registration does not constitute an endorsement by the Commission nor does it indicate that the adviser has attained a particular level of skill or ability. Through our Origin Exchange platform, introduced in 2024, investors can complete a 1031 exchange of their properties for professionally managed, institutional-quality assets. To learn more, visit www.origininvestments.com.

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