What Neal Bawa’s market outlook means for investors right now
By Michael Blank – CEO of Nighthawk Equity | Last updated: February 6, 2026
Are we finally at the bottom of the multifamily cycle?
For the last two years, investors have been told to “survive until 2025.” But the recovery hasn’t shown up the way many expected. Cap rates haven’t compressed much. Rent growth hasn’t returned. And underwriting still feels tight.
In a recent conversation with Neal Bawa on the Financial Freedom with Real Estate Investing podcast, we dug into what the data actually says about rent growth, supply, concessions, and where the opportunity may lie next.
In this article, you’ll learn:
- Why 2025–2026 is a “muddle year” for multifamily
- What rent growth may look like in 2027 and beyond
- Why waiting for perfect timing could cost you
Let’s break it down.
Why Has Multifamily Rent Growth Stalled?
Multifamily rent growth has stalled because the final wave of new supply has been harder to absorb than expected.
Neal Bawa explained that while early 2025 showed positive rent growth, heavy negative growth in the last quarter wiped it out, leaving the year flat. Nationwide, there is currently no major metro consistently producing strong 4% rent growth. Even historically strong markets have slowed.
The real pressure point is concessions. As of early 2026:
- 37% of U.S. apartment units had concessions
- That number is projected to reach 54% by midyear.
When more than half of all multifamily units are offering concessions, effective rents decline even if asking rents appear stable.
The “Last 10%” Supply Problem
According to Bawa, the final portion of this supply wave has been the hardest to digest. Class A deliveries have pressured Class B and even Class C assets through a trickle-down effect. Rent drops at the top ripple downward.
This matters because underwriting depends on predictable rent growth. When national rent growth sits at 0%, value-add assumptions become difficult to pencil.
In short, the market isn’t crashing. It’s just logically cautious.
What Happens to Cap Rates and Rents in 2027?
Rent growth is expected to normalize around 3% nationally in 2027, once concessions burn off and supply slows.
Bawa projects that 2026 will show modest rent growth, roughly 1–1.5%, with stronger normalization in 2027. The key shift will not be explosive rent growth. It will be the rapid reduction in concessions.
Here’s the likely sequence:
- Concessions decline in late 2026
- Effective rents stabilize
- Landlords regain pricing power
- Rent growth returns to ~3% in 2027
Some Sunbelt markets, especially those with lingering supply like Phoenix, may lag behind. But nationally, the supply wave is expected to largely abate by late 2026.
What About Cap Rates?
Cap rates have already adjusted meaningfully.
Transaction prices remain roughly 30% below peak levels from three years ago, according to Bawa. While values may not return to peak pricing, today’s basis is significantly more conservative.
This creates an interesting setup:
- Lower purchase prices
- Flat-to-modest rent growth
- Limited new supply coming
That combination can quietly produce strong forward returns.
Is Now the Right Time to Buy Multifamily?
If you are waiting for perfect clarity, you will likely miss the window.
Trying to time the absolute bottom rarely works. As Bawa referenced, even Warren Buffett admits he has never perfectly timed the bottom in his 50+ year career.
Today’s environment feels uncomfortable because legacy owners are still dealing with underperforming assets. But new buyers without past baggage are seeing opportunity.
This is what transitional markets look like. They feel uncertain. They do not feel obvious.
The Dollar-Cost Averaging Mindset
Instead of waiting for headlines to turn positive, consider:
- Buying at conservative assumptions
- Underwriting with 1–2% growth near-term
- Targeting long-term 3% normalized growth
Multifamily may not be “cheap,” but it is as inexpensive as it has been in years. Investors who commit during muddle years often benefit most during recovery years.
Frequently Asked Questions
Q: Should I wait until 2027 to invest?
A: Waiting for confirmed rent growth often means paying higher prices. By the time the recovery is obvious, competition typically increases and compresses returns.
Q: Are concessions a major concern?
A: Yes. Concessions directly reduce effective rent. However, once supply slows, concessions typically burn off quickly, restoring landlord pricing power.
Q: Is this a distressed buying opportunity?
A: Not in a 2009-style way. Banks have largely allowed extensions and loan workouts, which has limited forced selling. This is a pricing reset, not a fire sale.
Q: What rent growth should I underwrite today?
A: Many conservative operators are underwriting near-zero growth short term, 1–2% in 2026, and normalizing to 3% in 2027 and beyond, consistent with projected recovery.
Moving Forward
Multifamily today is not a boom market. It is not a crash market either. It is a transition market.
Supply is peaking. Concessions are high. Sentiment is cautious. But pricing is noticeably lower than it was three years ago.
If rent growth normalizes to 3% in 2027, as projected, today’s acquisitions could look very attractive in hindsight.
Hope you enjoyed the read!
To your success,
Michael Blank