Grant Cardone Reveals The 3 Reasons Why Multifamily Properties Are In A Correction: 'Oversupply Creates Increased Vacancy'

Marc Guberti

Sun, May 4, 2025, 12:15 PM 4 min read

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Grant Cardone has been sounding the alarm about a real estate correction in multifamily properties, and one of his recent X posts added more fuel to the fire. The real estate mogul and bestselling author has acquired many multifamily properties, but he believes the asset class is due for a deeper correction.

"Oversupply creates increased vacancy," he told investors on X when explaining the current trend. However, Cardone didn't stop there. He shared three big reasons why these properties will continue to face short-term pressure.

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Cardone first cited the Federal Reserve's interest rate hikes. Although the Fed reduced rates three times last year, they remain much higher than they were a few years ago. Landlords with variable-rate mortgages typically have to raise costs to preserve their profit margins during rate hikes, but that reduces demand from potential tenants.

Higher interest rates can also make homeownership more attractive for people who can make big down payments. As more people buy homes, the demand for rental units will continue to decline.

However, those higher rates will also limit each potential tenant's buying power. Higher interest rates make it more expensive to take out personal loans and hold credit card debt. These factors may force landlords to keep rent prices steady or lower them to attract new tenants.

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Cardone also mentioned $3 trillion in debt that is set to mature in the next 36 months. Most multifamily property owners financed their properties in a low-rate environment, especially borrowers whose loans mature within the next 36 months.

When these loans mature, borrowers will have to refinance the loans at much higher rates. Cardone says that these multifamily property owners will have to pay down debt by 20% to 30% to cover the elevated cost of debt.