Capital is Ready. Conviction is Cautious.

Since 2018, I’ve been attending the National Multifamily Housing Council’s (NMHC) annual meeting. Over time, it’s become less about the “annual meeting” and more about networking and catching up with business acquaintances. While I enjoy seeing people I haven’t seen since the last NMHC conference, it’s easy to fill your calendar with superfluous meetings and have variations of the same conversation all day long. That helps build necessary relationships, but it often falls short of delivering new knowledge.

I took a different approach this year. First, I blocked time to attend the core conference content. Sessions on the macroeconomic outlook, markets poised for growth, capital formation, and renter demand provided solid insight. For meetings, I limited them to existing service providers where we could expand relationships (e.g., insurance, lending), new service providers to have on call if needed (e.g., property managers), and investment sales brokers in markets we don’t visit often. Taken together, these conversations give you a good sense of the overall mood of the conference—and likely the industry.

Muted Tone

NMHC can be a big rah-rah event when the multifamily market is strong. This year, the tone was muted. Believe it or not, that’s an improvement over prior meetings. I’d argue that people feel the worst is behind them, but until rents begin to grow, broad optimism will be hard to find. Few people expect meaningful rent growth in 2026. More waiting, and a continued focus on operations, seems to be the theme this year, making it difficult for firms to get too excited. To me, this feels like a healthy dose of realism.

Where’s All the Distress?

Opinions on distress in the multifamily industry are mixed. Most agree there’s a “wall of maturities” cresting in 2026 and 2027. Five-year loans originated at the peak in 2021 and 2022 begin coming due this year. Many debt fund loans were structured as three-year terms with two one-year extension options, for a total of five years. There’s also broad agreement that most of the distress lies with debt funds. Unlike prior cycles, these debt funds have flexibility. They can aggressively finance their troubled deals to new buyers to 1) support pricing, 2) bring fresh capital into deals that need it, and 3) buy time to improve the odds of full loan repayment.

Those closest to the situation don’t expect a mass implosion that sends aftershocks throughout the industry. Banks and life companies are in better shape since they didn’t lend aggressively at the peak. The agencies (Fannie and Freddie) are also well positioned. While delinquencies are rising, they remain small and manageable. In fact, the agencies increased their allocation to real estate financing in 2026, signaling their willingness to stay active. While distress certainly exists, it appears to be largely managed.

Capital Availability

There is no shortage of capital looking for deals. New(ish) construction in strong markets—even struggling ones like Austin, TX—is trading at 4-caps. With debt in the low-to-mid 5% range, buyers are accepting negative leverage, betting on recovery and lower basis. Debt markets reinforce this view: debt funds remain aggressive, banks and life companies are lending again, and the agencies have ambitious plans for 2026. Even development firms are acquiring existing properties because replacement costs far exceed current values.

Where capital is scarce is in poorly located Class B and C properties. These deals trade at cap rates above the cost of debt, allowing for positive leverage, yet there’s no dominant buyer group. The aggregators are gone. This segment is now highly deal-specific and narrative-driven, making it difficult to gauge overall performance. Historically, wide spreads between property classes attract capital to Class B/C, narrowing the gap—but whether that happens here remains TBD.

Economic Outlook

The economists offered mixed signals for multifamily. Property owners want wage growth to improve demand, but it has slowed. Real wage growth is barely positive, and tariffs raise prices without increasing wages—unlike what you’d expect in a truly inflationary environment. Immigration was also cited as a negative for apartment demand: job growth has been limited, and labor supply has declined.

AI has had only a marginal impact on corporations so far, though most expect it to be a shock to white-collar employment. New college graduates are entering a “no-hire, no-fire” economy, pushing unemployment higher for that cohort (though still at reasonable levels), which also affects apartment demand. One positive: units under construction are roughly half of 2023 levels, supporting the industry’s medium-term outlook.

So, where would the economists invest?

For 2026, the consensus picks were:

• San Francisco Bay Area, Chicago (all 3 economists)
• Minneapolis (2)
• Miami, Cincinnati, Orange County, Philadelphia, New York City (1)

For 2026-2028:

• Seattle (3)
• Nashville, Charlotte (2)
• Minneapolis, Miami, Inland Empire, Phoenix, Columbus, Chicago, Raleigh (1)

For 2026-2030:

• Austin (2)
• Raleigh, Orlando, Salt Lake City, Boston, Denver, SW Florida, Washington D.C. (1)

The Bay Area, Chicago, and Minneapolis benefit from limited new supply. Chicago and Minneapolis remain affordable with decent job growth, while the Bay Area is seeing renewed demand from AI and tech firms bringing workers back. Austin faces a long road to absorb record levels of new supply. Charlotte, despite being oversupplied, has such a strong job story that economists expect a faster recovery. Lastly, Yardi Matrix forecasts national rent growth over the next five years of 0.5%, 1.0%, 2.3%, 3.2%, and 3.5%. Not terribly exciting, which is why market selection matters so much.

In summary, apartment supply is falling quickly, but demand faces headwinds from immigration policy and sluggish job and wage growth. Which force wins out remains to be seen. We favor the Bay Area: minimal new supply, demand returning, a volatile political environment, and aging housing stock that discourages new entrants and limits competition. If demand accelerates even modestly, watch out.