The multifamily industry has had to navigate its share of uncertainty in 2025 with tariff and trade policy shifts as well as the longest government shutdown in U.S. history. Some of this uncertainty is expected to continue to disrupt in the coming year.
While David Scherer, co-CEO of private real estate manager Origin Investments, has confidence in multifamily fundamentals, he advises commercial real estate investors to keep planning horizons short and long-term outlooks flexible in his predictions for multifamily investing in 2026.
“Businesses have been operating in a period of unpredictability that has kept them on reactionary footing. Yet the economy has proven sturdy,” he notes. “But numerous outside factors in 2026, including the mid-term elections, could reshape that dynamic or intensify it.”
Scherer has a cautiously optimistic outlook for the coming year. Here are 11 of his top multifamily predictions for 2026:
AI Disruptions: While the impact of artificial intelligence (AI) on GDP isn’t clear yet, he warns the technology won’t just amplify human work, it will increasingly become a substitute for it.
Interest Rate Movement: Origin forecasts interest rates in the 3.6% to 4.6% range, with no drastic cuts or hikes.
Fundamentals to Strengthen: Scherer suggests a rebalancing next year, with concessions declining and rent growth improving as the recent multifamily supply wave is absorbed. In addition, the gap between renting and homeownership will plateau and narrow slightly; however, affordability will still remain a tailwind for the industry.
Investment Activity Rebound: Underwriting will remain tight, but deal volume is expected to accelerate as prices adjust and once-cautious investors develop a taste for risk and potential rewards.
“Multifamily real estate has gone through a sort of recession in recent years,” he says. “As we emerge, I believe the 2026 vintage will reward well-capitalized, organized managers and investors who move early in the next upcycle rather than waiting for the crowd.”
Development Starts: With supply declining, demand is robust. Scherer notes it will still be a challenge to get new developments started, but it provides an opportunity for developers with a vision and deals that pencil. He adds developers who start in 2026 are poised to deliver into one of the most favorable rent-growth windows of the decade.
Construction Costs: Origin predicts flat construction pricing for 2026, with tariffs as a wild card.
Rent Recovery: Multilytics, Origin’s proprietary AI model, forecasts year-over-year rent growth greater than 4.4% in nine of its 15 target markets—Charlotte, North Carolina, leading at 5.7%, followed by Houston; Las Vegas; Jacksonville, Florida; Raleigh, North Carolina; Dallas; Colorado Springs, Colorado; San Antonio; and Atlanta. Only one market—Austin, Texas—is forecast to fall below the 3% level, with 2.8% predicted.
Multifamily Expenses: Controllable expenses are expected to stabilize, benefiting from moderating payroll and materials costs, the flattening of insurance costs, scaling vendor pricing, and maximized technology efficiencies.
Credit Spreads: Near the tightest levels seen in decades, credit spreads are predicted to widen moderately, accelerating in the second half of the year. The beginning of the institutional demand shift toward equity investments and lower benchmark rates will prompt lenders to seek higher yield premiums, thus creating a more favorable environment for private credit managers.
“Demand for private credit is likely at or nearing its peak,” Scherer says. “But credit dislocation equals opportunity with better entry points, higher yields, and stronger covenants that help reduce risk.”
Consolidating Capital: The sector is expected to continue consolidating as firms struggle to secure financing or raise equity. The best-positioned firms will be those that retained talent, preserved lender relationships, and protected their operating engines through the slowdown.
Opportunity Zones: According to Scherer, investors in Qualified Opportunity Zones will wait on the sidelines until 2027, when the step-up benefit, tied to the five-year deferral period, may be too good to pass up. However, he adds investors focusing on the viability of a deal and not solely the tax treatment of gains may have an advantage.