HIGHER FOR LONGER
For much of the past two years, multifamily owners across the Puget Sound region have operated under the assumption that interest rates would eventually decline and unlock improved pricing and transaction activity. Today, that expectation is shifting. Rather than continuing to rise or meaningfully fall, interest rates appear to be settling into a “higher for longer” environment. The Federal Reserve has cut the federal funds rate by 75 basis points over the last 6 months; however, multifamily interest rates have remained the same due to the 5 & 10 year bond prices going unchanged. While this stability has reduced volatility, it has also changed how multifamily value is created and preserved in Washington State.
A flat interest-rate environment is not a reset. Buyers and lenders have recalibrated underwriting assumptions around debt costs, a new political environment, and risk tolerance. As a result, the market is no longer waiting for rate relief — it is functioning under a new set of rules.
This has important implications for owners. Operating expenses such as insurance, taxes, and utilities continue to rise regardless of interest rates, while rent growth remains constrained by regulation and new supply absorption. In this environment, simply waiting for market conditions to improve without working on building operations will reduce long-term flexibility.
Property value creation has shifted to factors owners can control: rent positioning, expense management, and regulatory planning. Buyers are prioritizing a building's in-place performance and realistic growth paths over optimistic assumptions about future capital markets.
Sales are still happening in the Puget Sound multifamily market, but it favors assets that are intentionally positioned. Properties with defined operational strategies and executable growth plans are transacting, while assets dependent on future rate compression or market recovery are struggling to attract buyers.
Interest rates have settled into a new normal. The key question for owners is no longer when rates will fall, but whether their property is positioned to succeed if they don’t.
On the Platt-Urquhart-Douglas team at Paragon, our expertise goes beyond just a listing. We’ve tailored our brokerage approach to help owners not only prepare for a sale today but also plan for sales down the road — by navigating the ever-changing multifamily market in 2026 and beyond. Give us a call if you’d like to strategize what the next 12–36 months could look like for your investment property.
If you would like to know more about 1031 exchanges, want to know the market value of your investment property, or would like a referral to a tax, legal, or 1031 exchange professional, please feel free to reach out to anyone on the team. Brian Platt – Brian@ParagonREA.com | (206) 251-8483, Michael Urquhart – Michael@ParagonREA.com | (425) 999-6650, Ben Douglas – Ben@ParagonREA.com | (206) 658-7247 or Rowan Davis – Rowan@ParagonREA.com | (206) 406-9105.