On September 16, the Federal Reserve raised its benchmark rate by a quarter point, to a target range of 3.75% to 4.00%. The vote was unanimous, 12 to 0, and it is the first increase since 2023. The Fed’s statement was short and direct: “Inflation remains elevated.” Most committee members now expect one more increase before year end, likely in December, depending on the next few inflation reports and the path of energy prices.
For apartment owners and buyers in Los Angeles, the headline number matters less than what it did to long-term borrowing costs. Here is what changed, and what it means for the multifamily market.
The Fed sets short-term rates. Most multifamily loans, including agency (Fannie Mae and Freddie Mac) and life company debt, are priced off the 10-Year Treasury. That yield crossed 5% the day of the announcement and was about 5.12% as of September 23, its highest level since 2023.
Agency lenders have been quoting stabilized apartment loans at roughly 110 to 170 basis points over the benchmark. With the 10-Year above 5%, that puts most fixed-rate multifamily financing somewhere in the mid-6% range, depending on leverage, loan size and the property. Floating-rate bridge debt, which is tied to short-term rates, moved up directly with the Fed.
The driver is inflation. Headline CPI was 3.4% year over year in August, pushed up by energy, with oil back above $100 a barrel. Core inflation, which strips out food and energy, was 2.4%, the lowest since 2021. The bond market is betting the Fed will stay firm until energy costs stop feeding into everything else.
Higher rates are not all bad news for apartment owners.
If you are selling: price to today’s debt market, not last year’s. Buildings that are priced realistically and marketed widely are still getting done. If your property has an assumable loan at a rate below today’s market, that can be one of your strongest selling points.
If you are buying: underwrite at current rates with a cushion, and stress test the deal for one more increase in December. This may be the time to negotiate harder, particularly on properties that have been sitting on the market.
If you are holding: look at your loan maturity dates now. If you have a loan coming due in the next 12 to 24 months, start the refinance conversation early so you have time to weigh your options.
Rate cycles create both challenges and opportunities. The owners and investors who plan for them, rather than wait them out, are usually the ones who come out ahead. If you would like to talk through how the rate increase affects your building or your next acquisition, or would like a current opinion of value, reach out to The James Group. We are always happy to help.
Peter James
Peter James is a First Vice President at Lyon Stahl Investment Real Estate and Co-Founder of The James Group, a leading Los Angeles, based investment brokerage team specializing in the sale of multifamily properties. Since beginning his career in 2007, Peter has built a strong reputation as a trusted advisor in the Los Angeles apartment market, with deep experience across the Westside and surrounding submarkets.
Peter advises investors on the acquisition and disposition of multifamily assets throughout Los Angeles County. His approach combines detailed financial analysis, real-time market insight, and a clear understanding of investor objectives, allowing him to guide clients through both straightforward and highly complex transactions.
In addition to traditional multifamily brokerage, Peter has extensive experience structuring and executing 1031 exchanges, including transitions into single-tenant NNN properties and Delaware Statutory Trust (DST) investments nationwide. His ability to navigate tax-deferred strategies and long-term portfolio planning has helped clients preserve capital, increase cash flow, and achieve greater flexibility across market cycles.
As Co-Founder of The James Group, Peter has helped build a collaborative, high-performing team known for integrity, disciplined execution, and market expertise. He maintains strong working relationships with lenders, attorneys, and qualified intermediaries, ensuring that each transaction is coordinated efficiently and aligned with his clients’ broader financial and investment goals.
Outside of real estate, Peter enjoys spending time outdoors with his wife, Jessica, and their daughters, Dylan and Daphne. Whether surfing, snowboarding, or exploring the California coast and mountains, family and an active lifestyle remain central to his life. Peter is a graduate of the University of California, Riverside.
