Soft Rents Got You Down? Never Fear, 2026 is Almost Here.
Welcome to the Skeptical Investor weekly BP article. A frank, hopefully insightful, dive into real estate and financial markets. From one real estate investor to another.
This week, we’re talkin’ multifamily real estate softening, rents down, and what to expect in multifamily in 2026.Let’s get into it.
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Today’s Interest Rate: 6.35%
(☝️.05% from this time last week, 30-yr mortgage)The Weekly 3 in News:
- - Housing Supply: putting things in perspective. Yes, housing supply is up and rents are down. This is a good thing for a healthy housing market. Especially after years of anemic supply (HousingWire).
- - NY Fed Household Survey: The share of households who think their financial situation will be better in a year matched a new 2-year low in Nov. Fewer than 26.5% of households expect their situation to improve. I am highly skeptical of surveys, but we shouldn’t ignore them either (NY Fed).
- - Nashville News - The Boring Company has released an update on the tunnel it’s building in Nashville. The initial airport-to-downtown tunnel will carry 20,000-30,000 people per hour and have 20 stations! Out of 45 necessary permits, 27 have been approved, and 10 are under review, while the remainder relate to proposed route expansions. Now that is pro-business. Tunneling to start Dec 15th (Merritt)!
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Fed Day Tomorrow
The Federal Reserve FOMC Committee is meeting today and tomorrow to decide whether to cut interest rates.
I’m frankly bored with this.
Rates are almost certain to be shaved by 0.25%. This, after multiple comments from Fed officials signaling this decision (although, it is likely not to be unanimous, as we talked about last week).
Here is all you need to know about the Fed and interest rates for the next 6 months.
Yesterday, in a wide-ranging interview with Politico, the President was asked about interest rates and the Fed:
Nuff’ said.
Let’s move on to something more interesting.
The State of Play: Multifamily Real Estate
Pour yourself a strong coffee.
Go ahead, i’ll wait….
…Ok, done waiting.
For this review, I’m pulling from November data / reports over at Yardi Matrix, a commercial real estate data and analytics platform (they are fantastic, more on them here).
Apartments: The Good, Bad and the Ugly
Advertised rents for multifamily apartments dropped $8 in November to $1,740, marking the fourth straight month of declines. That’s a $17 haircut from the summer high. YOY was still positive, but growth scraped by at 0.2%—the lowest growth since Q1 2021, when post-pandemic stagnation set in.
So, average Year on Year rents are basically flat.
Top YOY performers: New York (5.7%), Chicago (3.8%), Twin Cities (3.2%). Bottom: Austin, Phoenix, Denver.
But this doesn’t tell the real story. The concern for us real estate investors, is a pervasive footprint into our market, and momentum shifts as signals.
Where is weakness spreading and where is it holding up?
Sunbelt markets like Austin, Denver, Phoenix, and Dallas have posted negative rent growth for over a year. Higher supply has hit occupancy rates.
This makes sense, build more, rent is more affordable (what a concept).
And absorption of that inventory has been robust, squashing any large concerns of problematic occupancy rates.
This is a strong positive signal of a healthy housing market.
The Winter Shift
But, we are starting to see this shift in some markets.
In November, recent higher-performing markets flipped negative: as we see in Columbus, Indianapolis, New Jersey, San Jose, and San Francisco.
These areas recently led rent increases and maintained occupancy at or above the national average, so “weak demand” doesn’t explain it.
Two Logical Causes:
First, seasonality.
November historically drags growth, with all four post-pandemic Novembers showing dips followed by Q1 rebounds.
Second, structural imbalance.
As we know, new supply is still flooding in faster than demand can absorb all of it.
Add to this: tighter immigration, eroding consumer confidence, and faltering job growth have throttled household formation. Year-to-date absorption holds up, but October’s unit uptake hit a multi-year low. Hell, immigration crackdowns alone could be responsible for 700k+ fewer renters and homebuyers in the market (JBREC).
But wait wait, there’s more….
Counterpoint November: A Potential Positive Inflection Point?
Yes, rents fell in November, but, according to housing economist Jay Parsons:
1) “…it was the smallest Nov cut in 4 years.
2) From March to October, monthly rent change numbers came in as at/near the weakest since 2009. That streak was snapped in November.
3) Additionally, November snapped a 7-month streak of weakening year-over-year rent change. It wasn’t much, though, shifting from -0.70% in October to -0.66% in November.”
The takeaway?
Rents are sliding, but the baserunner may be about to touch home. Remember, housing supply has already peaked; the mini-COVID policy-driven construction boom is over.
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My Skeptical Take:
Picture this.
You’re an investor eyeballing a shiny new multifamily deal in Charlotte or Raleigh.
YoY rents? -0.9% and -0.7%.
But completions as % of stock? 7.4% and 5.3%.
That’s a flood of units still hitting a market with job growth at 2.3% and 1.7%—decent, but not enough to absorb the glut.
An investor seeing this should take note, and hit the pause button on that purchase.
And the forecast for year-end 2025?
Still negative, or flat in high-supply spots.
Yes, multifamily’s in a very soft patch. Supply’s overwhelming demand, and YoY growth at 0.2% is anemic. Top performers like NYC (5.7%) and Chicago (3.8%) are outliers—coastal stability, sure, but even they dipped MoM.
Sun Belt’s in worse shape.
All this signals caution.
But….
…we should always be asking ourselves, what information would make me change my thesis/posture?
And we have some….
Enter 2026 (we are just 20 days away FYI).
Yes yes, I said this the last 2 weeks, but it IS the most important thing in real estae that folks are sleeping on.
We are passing through peak supply right now.
In my home market of Nashville, we already passed through the matrix.
And in the next 6 months most major cities that boomed and have appeared as “weak” markets" will too. Housing supply will drop back down to the undersupplied Pre-COVID levels.
Chart on:
But wait wait wait, there’s more!
Forward demand is picking up.
Applications for a new mortgage just hit a new yearly high, in November?
Yes.
Frustrated potential homebuyers are capitulating, and I think I know what they are thinking…
“Fuck it, we need a house.”
Ignore the doom in the media and on social.
Sharpen your pencils, 2026+ is going to be a banger in Multifamily.
Until next time. Stay Curious. Stay Skeptical.
Herzliche Grüße,
-The Skeptical Investor
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