release edition [052] read time [10 minutes] Welcome to The Multifamily Download, a weekly newsletter where I provide institutional insights to help you build an exceptional Multifamily career. Forwarded this email? Subscribe here. Today at a Glance:
How to keep up with AI in 2026:IntroductionWelcome to The Multifamily Download! Many of you are first-time readers, so I wanted to give you a quick overview of what to expect each week. For quick context, The Multifamily Download launched in early 2025, and the response has been resoundingly positive. I am fortunate and thankful that you continue to open, read, and provide feedback week after week. As the author, this is a weighty responsibility and it is not one that I take lightly. Each week, my goal is to provide institutional market insights for Multifamily professionals each week from varying perspectives, including:
... Plus a few new formats that I'm excited about in 2026! Some weeks I'll zoom in on specific markets or deal related case studies, and other weeks I'll zoom out to assess the Macroeconomy or various National trends. Each week I will deliver thoughtful insights to enhance your career or business in the CRE or Multifamily sector. My hope is that this newsletter becomes a go-to weekly read that you're excited to share with your peers or colleagues. Thank you for reading, and I wish you much success in 2026! P.S. -- Feel free to reply to these weekly emails anytime! -- Trey Predictions2026 will be an interesting year for the Multifamily sector. The K-Economy is alive and well, with the top 10-20% benefiting from elevated asset prices, and the bottom quartile struggling to keep up with prices of goods and services in the post-COVID economy. Additionally, as noted yesterday in the jobs announcement, the 2025 estimated job gains totaled just 584,000. Outside of recession years, that figure would be the weakest annual job growth seen since 2003, BLS data shows. On a more positive note, real wages have now grown for 35 consecutive months, which bodes well for overall affordability. More importantly, though, is that this persistent wage growth (benefitting the bottom 50%) combined with ATH stock market (benefitting the top 25%) perpetuates what the economy needs most: confidence. This improving affordability, albeit slow, is a positive sign for the bottom half of income earners in the U.S., and for the economy at large. As you may recall, roughly two-thirds of our GDP is based on consumer spending. Consumers spend money when they are confident about the future. And consumers are confident about the future when inflation is low, when wage growth is real (i.e. above inflation), borrowing costs are coming down or low, and business activity is increasing or strong. 2026 could be the year that one of two things happens in the U.S. and global economy: (A) The train finally runs off the track. Stocks are roaring, but the Buffett Indicator continues to climb well beyond 200%. Long interest rates are relatively steady, but the Government deficit is increasing and debt to GDP is ~124%. Consumers continue to spend money, but buy-now, pay-later is increasing and credit card utilization is at all-time highs. Many are predicting a stock market crash after a prolonged period of steady gains since 2009 (aside from a few relatively short-lived draw downs). For better or worse, a stock market crash (i.e 30%+ in a short period of time) would create a fear-based news cycle, and this would result in a loss of the confidence that our economy relies upon to sustain positive momentum. This breach of confidence may lead to asset liquidation and subsequent value erosion, a defensive posture for household spending, and a dramatic slow down in the purchasing of goods and services that keep the economy humming along. (B) GDP & wage growth accelerate. Elon Musk recently went on the record that GDP growth could eclipse "double digits" with the oncoming A.I. and robotics revolution that many are predicting (including Elon). With the Chairman of the Fed being replaced in May, the market expects that the Fed Funds rate will come down to r* (i.e. the natural rate) or lower, and that will create positive momentum in the economy. This momentum may lead to inflation, and if so, the Fed will inevitably be pressured to "run hot", whereby short term interest rates are lower than inflation (negative real rates) on the hope that wage growth will outpace inflation (positive real wage growth) through continued growth in productivity per capita. Which camp are you in? 1 or 2? Because your answer will greatly influence how you see the year ahead unfolding. The reality is that 2026 will likely land somewhere in the middle. There will be some pain and suffering, but there will also be growth and opportunity. In other words, I expect the K-economy to continue, and I expect 2026 to eerily resemble 2025, both in the broader economy and in the Multifamily sector. The reality is that Multifamily cannot escape the ripple effects created by the broader economy. With the above foundation laid, here are my Multifamily predictions for 2026. Enjoy! 1/ Leasing to mirror 2025, but in reverse Headlines were resoundingly positive during the first half of 2025 ("1H 2025") with respect to demand, absorption, and a broad optimism that Multifamily fundamentals were generally beginning to tighten. Then the Summer arrived. Occupancies dipped, concessions increased, and many Multifamily operators were left scratching their heads (and licking their wounds) in a major way. I expect 2026 to mirror 2025, but in reverse such that 1H 2026 is a continuation of 2H 2025, and that 2H 2026 is a reversal towards what we saw in 1H 2025. Said differently, I expect Multifamily rental rates, on average, to bottom in late Q2 or early Q3 before reversing trend in Q4 2026 as the broader market enters into a new growth cycle. 2/ Rent growth to compress vs 2025 In 2025, I predicted that rent growth from peak to trough would exceed double digits, and I was correct. I expect this to compress in 2026 with year-over-year (YoY) rental growth in the top 2025 markets growing more slowly, and rental growth in the bottom markets being slightly less negative than it was in 2025. Even so, I expect average national rent growth for 2026 to be on par with 2025 due to the timing and slow speed of the ensuing recovery, especially because of the anchor effect of lagging performers dragging down the top performers. 3/ Renewal change to outpace rent growth Markets will experience an increase in renewal growth in 2026. For many Multifamily operators, 2025 was about protecting occupancy even if it meant reducing a resident with a gain-to-lease ("GTL") by offering them a reduced lease rate at renewal. I expect renewal growth to outpace rent growth in most markets, as it becomes cheaper to stay than it does to find new housing. The caveat here, though, is that renewal concessions will remain pervasive in markets with elevated supply. Operators that can strategically retain residents with improved YoY renewal rates will make NOI gains in 2026 as inflation is tempered and insurance markets are healthy coming off a 2025 with zero hurricanes making landfall in the Gulf of America. 4/ Resident retention up YoY, again To piggyback on number 3 above, I expect resident retention to remain strong (and potentially improve) in 2026 as gain-to-leases collapse and residents realize that renewing their lease is cheaper than the cost of moving elsewhere at market rates. The time for renters to move was in 2024 and 2025, but the rental housing market will find it's footing in 2H 2026 and the value proposition for moving will fade. Once again, affordability will become a focal point, particularly in B- and C-Class apartments for residents that are already paying 40%+ of their income towards their housing costs. 5/ Sales volume up as distress materializes Bridge and 5-year fixed rate loans that were originated in 2021 are coming due this year. Plus, many 2022 originations will also come due this year as lenders decide to stop extending existing bridge loans. Notably, when a few big lenders stop playing Mr. Nice Guy then a race to liquidate could begin, and the entire lender / borrower landscape could shift seemingly overnight. Oh, and don't forget that loan penalty interest rates are already working against many borrowers today. I expect a rise in maturities, NODs, and foreclosures. Pain is coming, and I expect it will begin to emerge in 2026. 6/ Yield curve will be volatile The Bond market went to war with the new Administration in April 2025, and I think we'll see a similar event or two in 2026 that will create volatility. The market has become complacent with the 10-yr UST sub-4.5% for the past 7+ months after tremendous volatility coming out of the COVID era and through early 2025 as shown below. I expect several moments of bond market frustration that could lead to opportunities for patient, diligent buyers. 7/ A.I. goes mainstream 2025 was the warm up and 2026 is game time. Major companies will aggressively implement and acquire A.I. tools or workflows in 2026. If data is the modern gold, then A.I. is the mining equipment, and you are the heavy machinery operator. Learn A.I. or get left behind. That's my mindset in 2026. Come join me in the A.I. for CRE Collective. 8/ Syndicator struggles go public We've seen headlines about foreclosures and loan recourse judgements in 2025, and I expect these headline to accelerate in 2026. Time is ticking, and it's not on the side of syndicators that overpaid and over leveraged at the wrong time. I'm an optimist, but I'm also a realist, and the reality is that investors and operators cannot pay peak prices for old assets in supply drenched markets and expect to make it out unscathed. Caveat Emptor. 9/ Operators will scale down, not up This trend has already begun, as Multifamily operators that have been typically more institutional in nature have begun to scale down to pursue middle market assets. Historically, institutional operators would pursue Joint Ventures ("JVs") with institutional fund allocators or family offices to acquire assets that required $20M+ equity checks because of the fee and carry economics that justified these pursuits. While this will continue, I expect many of these operators to begin adding middle market pursuits to their pipelines in 2026 as A.I. and technology allows their existing teams to cast an even wider net. 10/ Soft SFR for-sale will hurt lease-ups Last, and certainly not least, is that I expect continued softening in the for-sale SFR market to drag on newer Multifamily supply and rental rates, including both new deliveries and active lease-up properties. The lock-in effect has loosened it's grip on the artificially constrained SFR supply (see below), and as a result, I expect pricing to soften further in the for-sale housing market as pricing discovery continues and homeowners relocate on the typical 5-7 year cycle post-COVID. SummaryWell, there you have it. Those are 10 of my Multifamily predictions for 2026. I hope you found them insightful as you finalize your investment thesis for 2026. How did I do? Do you agree or disagree with any? Hit reply and let me know what you think! P.S. Check out The CRE Research Vault if you'd like 350+ data driven resources at your fingertips in 2026, including an A.I. meta-analysis of 50+ annual market reports predicting how 2026 may unfold. NMHCWill you be attending NMHC? Let's connect in Las Vegas! Reach out by leaving a comment here on LinkedIn, or by replying to this email. If not, please feel free to schedule a call here. Weekly ListenThis week's listen is The Rent Roll podcast hosted by rental housing economist Jay Parsons, alongside his esteemed guest John Burns of John Burns Real Estate Consulting, in which they discuss 15 predictions for 2026. Jay and John study housing data for a living, so you'll want to tune into this one! You can listen to the full episode here. Wrap UpThat's it for today. I hope you found this edition of The Multifamily Download insightful. Consider sharing this link to The Multifamily Download with a friend or colleague. Your feedback is appreciated, so feel free to reply anytime. Thanks for reading. See you next week! Forwarded this email? Sign up here. Join me on LinkedIn | Twitter | Website |
The Multifamily Download · January 10, 2026
10 Multifamily Predictions for 2026
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