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n this Financial Samurai podcast episode, I speak with Ben Miller, co-founder and CEO of Fundrise, about his outlook for residential commercial real estate in 2025. Despite high mortgage rates, he's optimistic and shares the main reasons why.

    Listen to my conversation with Ben by clicking the play button below or going to the episode on Apple or Spotify.

    Reasons To Be Positive On Residential Commercial Real Estate In 2025

    I recently wrote about why I believe residential commercial real estate presents a compelling investment opportunity in 2025. However, high mortgage rates have raised doubts. Ben's positive perspective is reassuring, and I've summarized the four key reasons he's bullish on residential commercial real estate in 2025.

    1) Valuation Differential Between Stocks and Real Estate Is Too Wide

    The S&P 500 is trading at a historically high valuation multiple, while commercial real estate prices have declined by over 20% in the past two years. This massive valuation gap seems unsustainable, particularly if mortgage rates begin to edge lower.

    A chart highlights how apartment values have declined to levels similar to those seen during the global financial crisis. However, the economy and household balance sheets are stronger today, making me optimistic about residential commercial real estate.

    2) Performance Correlation Is Out of Alignment

    Stocks and commercial real estate have historically been highly correlated, but this correlation has broken down since 2022. This creates an opportunity for those who believe in mean reversion, as real estate could outperform stocks in a potential recession.

    A chart demonstrates the historical correlation between stocks and real estate.

    3) Future Undersupply of Housing

    Elevated interest rates have slowed new construction, setting the stage for a housing undersupply. Ben believes the oversupply from the building boom will be absorbed by 2025, leading to rising rents and residential commercial real estate prices.

    4) Low Risk Of Accelerating Inflation

    There's a fear that Trump's policies could bring significant inflation, but the economy in 2015-2017 was stronger than today, yet inflation remained low. Demographics also point to a deflationary trend over the long term.

    Investing in Commercial Real Estate for the Long Term

    As a value investor, I prefer allocating new investment dollars to undervalued residential commercial real estate rather than expensive stocks. With Fundrise, investing in commercial real estate has never been more accessible, with a low minimum investment of just $10.

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