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“The multifamily sector is pretty good,” said Ethan Penner at the top of his keynote speech at RealShare Apartments. Penner, managing partner at Mosaic Real Estate Investors, opened the two-day conference in Los Angeles with a speech focused on the Transformation of the Multifamily Sector. Penner is most commonly asked about rising interest rates and how they will impact multifamily investment, and to predict the end of the cycle, which he described as “an inane question.” Despite the rise in interest rates this year—and the forecast that rates will continue to rise—Penner said that multifamily will continue to be the favored asset class for real estate investment.

“Multifamily has been and will continue to be the favorite asset class for investors,” said Penner. “I think multifamily is a solid place to be. I think there is going to be a recessionary correction around the corner, but multifamily will continue to be a favored asset class for capital, and it will continue to thrive.”

While Penner had a broadly positive outlook on multifamily investment and its ability to withstand a recession, he believes the Fed should not increase rates. Increasing interest rates, he said, would almost certainly trigger a recession, followed by quantitative easing another period of low rates and quantitative easing. “In today’s world we are witnessing odd manipulation with interest rates. This is the first time in history rates are being manipulated higher,” he said. Forces of supply and demand should govern where rates go.” He added that things are worth less and people get poorer when rates go higher.

As a result, Penner does not understand the why the Fed has “manipulated rates higher” this year, but said that political motivation would be the only reason the Fed might raise interest rates. If increased interest rates trigger a recession within the next two years, he explained, it is unlikely that Trump would be reelected. This theory, he said, was the only way to explain the Fed’s current policy of increasing interest rates. As an alternative, he promoted a free market system with out interest rate manipulation and, potentially a system free from a Federal Reserve or centralized banking system.

Still, the Fed’s increase in interest rates has not impacted investment activity. In general, investors are increasing their allocations and exposure to real estate. Penner said that two decades ago, real estate represented only 5% of investment portfolios. Today, it is 10% or more, and it is increasing.

There are many questions on the horizon and a potential recession as a result of increasing interest rates, Penner said that there are still opportunities. His advice: identify unmet needs. “Find ways to meet unmet needs, and you’ll generate good returns for you and your investors.”