Why 2025 is the Perfect Time to Invest in Carolinas Multifamily Real Estate

In the dynamic landscape of real estate investment, timing can be just as important as location. As we navigate through 2025, a unique confluence of economic, demographic, and market factors has created what we at PrimeX Capital believe is an exceptional window of opportunity for multifamily investors in North and South Carolina. This comprehensive analysis examines why 2025 represents a particularly advantageous moment to invest in Carolinas multifamily real estate.

The Carolinas’ Economic Renaissance

Robust Job Growth Driving Housing Demand

The Carolinas have emerged as premier destinations for corporate relocations and expansions, creating a robust job market that directly translates to housing demand. In 2025, this trend has accelerated, with several key developments:

North Carolina’s Economic Momentum:

•The Research Triangle Park continues its expansion, with over 15,000 new jobs announced in the technology and life sciences sectors since 2023

•Charlotte’s financial sector has grown by approximately 8% year-over-year, cementing its position as the second-largest banking center in the United States

•Manufacturing investments exceeding $3.5 billion have been announced in the Triad region, creating thousands of high-paying jobs

South Carolina’s Industrial Boom:

•BMW’s $1.7 billion expansion of its Spartanburg facility is creating ripple effects throughout the regional economy

•Charleston’s port expansion has catalyzed growth in logistics and distribution, with warehouse space increasing by over 20% since 2023

•Greenville-Spartanburg has attracted over $2 billion in foreign direct investment in the past 24 months

This economic vitality directly translates to multifamily demand, as new workers require housing and existing residents experience income growth that enables them to upgrade their living situations.

Population Growth Outpacing National Averages

The Carolinas continue to experience population growth that significantly exceeds the national average, creating sustained demand for housing across all segments:

North Carolina:

•Ranked 4th nationally for population growth in 2024, with a 1.6% annual increase

•Raleigh-Durham and Charlotte both ranked in the top 10 fastest-growing metropolitan areas

•Net in-migration of approximately 100,000 people annually, with particularly strong growth among young professionals and retirees

South Carolina:

•Ranked 6th nationally for population growth in 2024, with a 1.5% annual increase

•Charleston and Greenville leading the state’s growth, with annual population increases exceeding 2%

•Significant influx of residents from Northeastern and Midwestern states seeking lower costs of living and higher quality of life

This population surge creates natural demand pressure in the housing market, particularly benefiting multifamily properties in growing urban and suburban areas.

The 2025 Market Correction: A Strategic Entry Point

Supply-Demand Rebalancing

The multifamily markets in the Carolinas experienced significant new construction between 2021-2023, leading to temporary supply-demand imbalances in certain submarkets. By 2025, this situation has begun to correct itself in ways that create strategic opportunities for investors:

Absorption of Excess Inventory:

•Charlotte’s occupancy rates have rebounded from 92.1% in 2023 to 94.3% in early 2025

•Raleigh-Durham has absorbed over 80% of the units delivered in the 2022-2023 construction boom

•Greenville’s absorption rate has increased by 35% year-over-year, rapidly clearing excess inventory

Declining Construction Starts:

•Multifamily construction starts across the Carolinas have decreased by approximately 40% from their 2022 peak

•Rising construction costs and tighter lending standards have limited new development

•Entitlement and permitting timelines have extended, further constraining new supply

This rebalancing creates a “Goldilocks” scenario for investors: the excess supply that temporarily suppressed rents is being absorbed, while new competition remains limited, setting the stage for rent growth acceleration.

Expanded Cap Rates Creating Value Opportunities

The interest rate environment and temporary supply challenges of 2023-2024 led to cap rate expansion across the Carolinas’ multifamily markets, creating more favorable entry points for investors in 2025:

Cap Rate Trends:

•Class B multifamily cap rates in Charlotte have expanded from 4.3% in 2022 to 5.5% in 2025

•Raleigh-Durham Class B assets are trading at 5.3-5.8% cap rates, up from 4.5-5.0% in 2022

•Secondary markets like Greenville, Wilmington, and Asheville have seen cap rates expand by 75-100 basis points

Pricing Adjustments:

•Per-unit prices have decreased by 10-15% from their 2022 peaks in many submarkets

•Seller expectations have realigned with market realities

•Distressed opportunities are emerging as some owners face refinancing challenges

This cap rate expansion, combined with moderating prices, creates a compelling entry point for investors who can acquire assets at higher initial yields than were available in recent years.

The Interest Rate Inflection Point

Monetary Policy Shift

The Federal Reserve’s monetary policy has reached an important inflection point in 2025, creating favorable conditions for multifamily investors:

Rate Stabilization:

•After the tightening cycle of 2022-2024, the Federal Reserve has begun its easing cycle

•The 10-year Treasury yield has declined from its peak of 4.8% to approximately 3.9% in mid-2025

•Market expectations indicate further moderate declines through 2026

Financing Opportunity:

•Agency lending programs have maintained strong liquidity for multifamily assets

•Debt service coverage ratio requirements have eased slightly from their 2024 peaks

•Interest-only periods are becoming more readily available for strong sponsors and properties

This interest rate environment creates a strategic opportunity: investors can acquire assets at expanded cap rates while financing costs have begun to moderate, enhancing potential cash-on-cash returns.

The Refinancing Window

The current interest rate environment creates a particularly compelling opportunity for value-add investors who can execute business plans over the next 2-3 years:

Refinancing Upside:

•Properties acquired in 2025 and improved through value-add strategies can potentially be refinanced at lower rates in 2027-2028

•This “cash-out refinance” strategy can return significant capital to investors while maintaining ownership

•The spread between cap rates and interest rates is projected to widen, creating positive leverage

This timing advantage—buying when cap rates are expanded but interest rates have begun to decline—is a rare alignment that enhances the potential returns of multifamily investments initiated in 2025.

The Value-Add Sweet Spot

Aging Inventory Meeting Renovation Demand

The Carolinas’ multifamily market has reached a critical inflection point in terms of property age and renovation potential:

Inventory Characteristics:

•Over 65% of multifamily units in the Carolinas were built before 2000

•The median age of multifamily properties in Charlotte and Raleigh is approximately 28 years

•Many properties have undergone only minimal renovations since construction

Renovation Opportunity:

•The gap between Class B/C and Class A rents has widened to historic levels

•Renovated units are achieving rent premiums of $250-400 in most submarkets

•Construction cost increases have made ground-up development less feasible, enhancing the value of existing properties that can be renovated

This aging inventory, combined with strong demand for quality housing at accessible price points, creates ideal conditions for value-add strategies that have been PrimeX Capital’s focus.

Operational Improvement Potential

Beyond physical renovations, many properties in the Carolinas present significant operational improvement opportunities in 2025:

Management Inefficiencies:

•Many properties remain under-managed, with expense ratios 3-5% above market benchmarks

•Technology adoption for property management remains inconsistent, creating opportunities for efficiency gains

•Utility billing systems and energy efficiency improvements offer immediate NOI enhancement potential

Amenity Optimization:

•Changing resident preferences post-pandemic have created new amenity opportunities

•Work-from-home spaces, package delivery systems, and outdoor gathering areas offer high-ROI improvements

•Smart home technology implementations are achieving rent premiums with relatively modest investments

These operational improvement opportunities, combined with physical renovation potential, create multiple pathways to value creation for strategic investors.

Demographic Tailwinds

The Millennial Housing Surge

The millennial generation has entered its prime household formation years, creating sustained demand for quality rental housing:

Demographic Shifts:

•The largest cohort of millennials is now in their early to mid-30s, a prime rental demographic

•Student loan burdens and housing affordability challenges have extended the rental lifecycle

•Remote work flexibility has accelerated migration to affordable, high-quality-of-life markets like the Carolinas

Renter Preference Evolution:

•Today’s renters increasingly prioritize location, amenities, and flexibility over homeownership

•The “renters by choice” segment has grown significantly, particularly in urban and near-suburban locations

•Willingness to pay premium rents for quality housing creates opportunities for strategic property improvements

These demographic trends support strong occupancy and rent growth for well-positioned multifamily properties, particularly those offering the amenities and features that appeal to millennial renters.

The Boomer Rental Renaissance

At the other end of the demographic spectrum, baby boomers are increasingly choosing to rent, creating a second wave of demand:

Downsizing Trend:

•Approximately 10,000 baby boomers reach retirement age daily

•Many are choosing to sell larger homes and transition to rental housing

•This trend is particularly pronounced in the Carolinas, which remain top retirement destinations

Rental Preferences:

•Boomer renters typically seek higher-end units with premium finishes

•They prioritize security, convenience, and low-maintenance living

•Many prefer smaller, boutique communities in walkable locations

This “silver tsunami” creates opportunities for multifamily investors who can position their properties to appeal to this affluent, stable tenant demographic.

Regulatory and Tax Advantages

Business-Friendly Environment

The Carolinas maintain some of the most business and landlord-friendly regulatory environments in the nation, creating advantages for multifamily investors:

Landlord-Tenant Laws:

•Balanced landlord-tenant regulations that protect property owners’ rights

•Efficient eviction processes compared to many other states

•Absence of rent control or onerous just-cause eviction requirements

Development Regulations:

•Streamlined permitting processes in many jurisdictions

•Pro-growth policies that support property improvements

•Tax incentives for rehabilitation of older properties in certain areas

This regulatory environment provides multifamily investors with greater operational flexibility and lower compliance costs compared to more heavily regulated markets.

Tax Advantages

The tax environment in the Carolinas offers significant advantages for real estate investors in 2025:

State Tax Benefits:

•North Carolina’s flat income tax rate of 4.75% is among the lowest in the Southeast

•South Carolina’s effective property tax rates remain below national averages

•Both states offer various incentives for property improvements and economic development

Federal Opportunity:

•The potential for tax code changes in coming years creates urgency to establish investments under current favorable conditions

•Cost segregation benefits remain substantial for multifamily acquisitions

•1031 exchange provisions continue to offer powerful tax deferral strategies

These tax advantages enhance after-tax returns for multifamily investments, particularly for value-add strategies that can maximize depreciation benefits.

The Carolinas’ Resilience Advantage

Economic Diversification

The Carolinas’ economies have diversified significantly, creating resilience that benefits real estate investors:

Industry Diversification:

•Technology, healthcare, financial services, manufacturing, and education form a balanced economic base

•No single industry represents more than 18% of employment in major metro areas

•This diversification provides insulation against sector-specific downturns

Growth Across Sectors:

•All major employment sectors in the Carolinas have shown positive growth in 2024-2025

•Wage growth has exceeded the national average by approximately 0.7%

•New industry clusters in clean energy, biotechnology, and advanced manufacturing are emerging

This economic diversification reduces risk for multifamily investors by ensuring stable employment and income growth even during challenging national economic conditions.

Climate Resilience and Migration

As climate concerns increasingly influence migration patterns, the Carolinas offer advantages that support long-term multifamily demand:

Geographic Advantages:

•Interior regions are protected from the worst impacts of coastal weather events

•Water resources remain abundant, unlike drought-prone Western states

•Four-season climate without extreme weather patterns in most areas

Climate Migration:

•The Carolinas are net recipients of climate-influenced migration from flood and wildfire-prone regions

•Insurance costs remain reasonable compared to coastal Florida and parts of the Gulf Coast

•Long-term projections suggest continued in-migration from climate-vulnerable areas

These factors contribute to the long-term sustainability of housing demand in the Carolinas, providing a foundation for multifamily investment performance regardless of economic cycles.

Strategic Market Selection Within the Carolinas

Primary Markets: Charlotte and Raleigh-Durham

The major metropolitan areas of North Carolina offer scale, liquidity, and strong fundamentals:

Charlotte Advantages:

•Financial sector growth creating high-income jobs

•Expanding public transportation infrastructure enhancing connectivity

•Neighborhood revitalization creating value-add opportunities in transitioning areas

Raleigh-Durham Strengths:

•Technology and life sciences expansion driving high-wage job growth

•Multiple major universities providing talent pipeline and rental demand

•Research Triangle Park expansion creating new demand centers

These primary markets offer the greatest liquidity and institutional interest, with strong long-term appreciation potential.

Emerging Secondary Markets

Several secondary markets in the Carolinas present compelling opportunities with potentially higher yields:

Greenville-Spartanburg:

•Manufacturing renaissance creating stable, middle-income jobs

•Downtown revitalization attracting young professionals

•Relative affordability compared to larger metros

Wilmington:

•Port expansion driving logistics employment

•Tourism and retiree demand creating diverse rental market

•Limited developable land constraining new supply

Asheville:

•Tourism and hospitality recovery creating employment growth

•Geographic constraints limiting new development

•Strong appeal to remote workers seeking quality of life

These secondary markets often offer higher initial yields and less competition from institutional investors, creating opportunities for nimble operators with local market knowledge.

PrimeX Capital’s Strategic Approach for 2025

Our Investment Focus

Based on the unique opportunities present in the 2025 Carolinas multifamily market, PrimeX Capital is focusing on:

Property Profile:

•Class B/C assets built between 1985-2005

•75-250 unit communities in strategic locations

•Properties with clear value-add potential through unit renovations and operational improvements

•Communities in submarkets with strong employment drivers and limited new supply

Target Markets:

•Primary: Strategic submarkets in Charlotte and Raleigh-Durham

•Secondary: Emerging opportunities in Greenville, Wilmington, and Asheville

•Tertiary: Selective opportunities in smaller markets with compelling fundamentals

Investment Structure:

•5-7 year investment horizon

•Target IRRs of 14-18%

•Cash-on-cash returns starting at 6-8% and growing to 8-10%+ through implementation of value-add strategies

•Equity multiples of 1.8-2.2x over the holding period

Case Study: The Opportunity in Action

To illustrate the current opportunity, consider this representative case study from our recent acquisition pipeline:

Property: Woodland Commons (name changed for confidentiality) Location: Suburban Charlotte, NC Size: 172 units Year Built: 1996 Purchase Price: 28.5million(28.5 million (28.5million(165,700/unit) Going-in Cap Rate: 5.4%

Value-Add Opportunity:

•Dated unit interiors with original kitchens and bathrooms

•Below-market rents ($175-225 under renovated comps)

•Inefficient property management (expenses 4% above market)

•Underutilized common areas and amenities

Business Plan:

•$12,000/unit renovation program

•Professional management implementation

•Amenity enhancements including package center, co-working space, and dog park

•Energy efficiency improvements

Projected Outcomes:

•Average rent increases of $250/unit

•NOI growth from 1.54millionto1.54 million to 1.54millionto2.15 million over 5 years

•Projected exit value of $39.7 million (5.4% exit cap rate)

•Projected IRR: 16.8%

•Projected equity multiple: 2.1x

This case study demonstrates how the current market environment creates opportunities to acquire quality assets at attractive valuations with significant value-add potential.

Conclusion: The Window of Opportunity

The confluence of factors we’ve examined—economic growth, population trends, supply-demand rebalancing, expanded cap rates, moderating interest rates, value-add potential, and favorable demographics—creates what we believe is a uniquely advantageous moment to invest in Carolinas multifamily real estate.

While real estate is always cyclical, the specific conditions present in 2025 offer a rare alignment of factors that benefit strategic multifamily investors. The opportunity to acquire assets at expanded cap rates, implement value-add strategies during a period of strong demand, and potentially benefit from interest rate moderation creates a compelling risk-reward profile.

At PrimeX Capital, we’re actively building our portfolio to capitalize on these conditions, focusing on properties where our proven value-add approach can generate superior risk-adjusted returns. We believe that investors who act decisively during this window will be well-positioned to benefit from both strong cash flow and appreciation as the Carolinas’ growth story continues to unfold.

Ready to explore multifamily investment opportunities in the Carolinas? Contact PrimeX Capital today to learn more about our current offerings and how we can help you capitalize on the unique conditions present in the 2025 market. You can reach our investor relations team at [contact information] or visit our website at https://1primexcapital.com/ to learn more about our investment approach and track record.

This article is for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any securities. Investment in real estate involves risk, and past performance is not indicative of future results. Potential investors should conduct their own due diligence before making any investment decisions.