Show Notes
In this episode, Neil Bawa returns to break down why 2026 is shaping up to be another “muddle year” for real estate. Despite strong capital availability and better-than-expected economic stability, rent growth has stalled nationwide and concessions are climbing toward record highs. Neil explains why the final wave of supply has been harder to absorb than expected, why distress hasn’t hit the market the way many predicted, and what needs to happen before sentiment shifts. He also shares why 2027 could mark the beginning of normalized growth again, and why waiting for the perfect bottom may cost investors more than acting early.
If you want a clear, data-driven view of where multifamily stands and where it may go next, this episode delivers it.
Key Takeaways
Why 2026 Is a “Muddle Year”
Nationwide rent growth ended 2025 flat after a late-year decline erased earlier gains.
Cap rates and interest rates have not adjusted enough to spark aggressive buying.
Capital is available, but institutional investors are acting cautiously.
Underwriting deals with near-zero rent growth makes most acquisitions hard to pencil.
The Supply Wave Isn't Full Absorbed Yet
Three consecutive years of elevated supply created prolonged pressure.
The final 25% of new deliveries has been the hardest to absorb.
Class A oversupply has pushed concessions into Class B and C assets.
- Over one-third of U.S. units currently offer concessions, projected to rise above 50%.
Why Hasn't Distress Hit the Market?
Banks are extending loans rather than forcing sales.
Lenders learned from 2009 and are avoiding mass foreclosures.
Owners are funding operating shortfalls instead of selling at steep discounts.
- This has limited true “fire sale” buying opportunities.
What Will Change in 2027?
Concessions are expected to decline rapidly in late 2026.
Some Sunbelt markets may lag due to lingering supply.
Improved growth assumptions will allow underwriting to work again.
Policy and Market Dynamics
Political shifts and federal policy are influencing real estate sentiment.
Interest rate expectations remain a major driver of capital deployment.
Institutional capital is present but waiting for clearer signals.
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