Our 2026 Multifamily Forecast: 8 Trends Every Passive Investor Should Keep An Eye On

As we close out 2025 and map our strategy for next year, I've been spending a lot of time thinking about what the multifamily landscape will actually look like in 2026.

Not what we hope it will look like. Not what the generic publications are predicting. But what the data, the trends, and frankly, the reality on the ground are telling us.

I want to share eight predictions I have for 2026 - not because I have a crystal ball, but because these are the trends we're actively planning around in our own investment strategy. And if you're a multifamily investor, these predictions should inform how you evaluate opportunities heading into next year.

This isn't hyperbole. Between rent control legislation spreading across states (Massachusetts is voting on statewide rent control that will be voted on in late 2026) and mayors like Mamdani in NYC running on platforms to freeze rents city-wide, the political landscape is now as relevant as the traditional market fundamentals.

When you're evaluating deals in 2026, you can't just look at job growth, population trends, and rent comps anymore. You need to understand the political environment because it can change market sentiment quickly (and drastically).

New supply keeps getting absorbed in high-growth markets throughout the Southeast and Southwest. Meanwhile, the typical C-class resident is getting squeezed by persistent inflation and continued cost-of-living growth. Translation - they simply can't absorb rent increases.

Downstream, this means C-class apartments become less attractive to investors and less creditworthy to lenders. If you're holding C-class assets, your exit strategy needs to account for a narrower buyer pool who will have access to less liquidity than in years past.

Heavy value-add deals require significant construction, significant overhauls from a management approach, and further expose you to the political volatility I mentioned in prediction #1. As landlord-tenant laws becoming more tenant-friendly (broadly speaking, although more so in some markets than others) and the execution risk in today's environment, investors will favor stabilized or light-value-add deals that don't require intensive business plans. Additionally, with rents continuing to flatten/decline in many (arguably most) markets, there is less certainty for investors who are underwriting top-of-market stabilized rents when starting a heavier value-add. More risk!

AI tools are becoming more abundant and more powerful. Property management companies that adopt these tools early and integrate them thoroughly into their operations are going to develop a massive competitive advantage - better efficiency, more competitive pricing, and higher service quality. Tools like conversational AI to assist with top-of-funnel leasing, smart maintenance AI to assist with triaging maintenance requests, etc, will soon become industry standard.

A significant corollary to this was the massive shift to adopt global talent in the late 2010s - if PMs didn’t supplement in-office staff with global talent, they were likely underdelivering on the service side, while running a less efficient (and profitable) business… and the same is happening with AI.

Legacy PMs who resist this shift will lose market share at an accelerating rate.

As an investor, you need to know which camp your PM falls into because it will directly impact the quality of service that you, or your PM, is providing to investors.

Data is everywhere now. Research tools make finding rent comps and sales comps easier than ever. The informational edge that local investors once had is shrinking fast. Additionally, real estate investing education has become completely democratized. Between YouTube, podcasts, books, and social media, the average “know-how” of a beginner investor is much higher than ever before.

Of course, investors can still find good deals if they're plugged in and consistently searching, but the percentage of "outlier" deals - properties that trade significantly below or above market - will continue to fall (with more deals trading in a tighter pricing window).

Last year, we saw investors start abandoning the fancy amenities playbook - clubhouses, pools, co-working spaces, high-end finishes in B and C class properties. We’re predicting that the trend will accelerate in 2026.

Investors are realizing that reducing capex and offering more competitive rents is a better strategy than trying to command premium rents with premium amenities. Renters in these classes are making decisions based on price, not whether you have a co-working in your clubhouse or valet trash services. For the investors who have been installing granite in their C+/B- class units, it may be time to switch back to a premium laminate, and price your unit a bit lower.

In our business, we’re focusing on more economical unit renovations, so we can price our rents in the “mid-market” range, which helps to reduce vacancy and increase demand when leasing units.

Single-family home prices continue to separate from what buyers can actually afford. The median age of first-time homebuyers keeps climbing. More people stay renters for longer.

For multifamily investors, this means stickier residents with longer average lengths of stay (specifically for 2BR and 3BR units). In units that families predominantly occupy, we estimate that the average length of tenancy will continue to increase, especially when compared to residents of 1BR units. In studios/1BR units, we predict these units will turn over more regularly, as tenants chase lower rent options and are more likely to bunk up in larger units with roommates.

Here's the bottom line: any rent growth we see in 2026 will likely be offset by commensurate expense growth - utilities, insurance, property taxes. Add in challenges with tenant creditworthiness as incomes rise more slowly than the cost of living, and we're not going to see NOI grow at rates that drive meaningful appreciation.

Top-line rents might grow. But net operating income? I don't see it. And without NOI growth, we won't see cap rate compression or a surge in multifamily demand beyond what we experienced in 2025.

If you're evaluating deals right now or planning your 2026 investment strategy, these trends should fundamentally inform how you underwrite opportunities.

We're actively adjusting our investment thesis in light of these predictions. We're focusing on markets with favorable political environments, avoiding heavy value-add plays, targeting light value-add and stabilized assets in B-class submarkets, and being extremely conservative on exit assumptions.

If you want to discuss how these predictions impact specific opportunities you're looking at, or what our pipeline looks like heading into next year, just reply to this email. I'm happy to share more details!

— Axel