After years of uncertainty, multifamily is entering a reset. While new supply is slowing, fundamentals vary widely by market, and cost pressures remain relentless. In advance of the Multifamily Executive Leadership Summit, Jeff Adler, vice president and general manager of Yardi Matrix, shares his outlook on rents, occupancy, expenses, and the markets operators should be watching closely in 2026.
Hear from Adler and other industry leaders in a more intimate and casual setting at the Leadership Summit, March 1-3, in Vail, Colorado. To see the full agenda and apply for the event, visit mfesummit.com.
As the industry enters 2026, what does the data suggest about where the market is headed?
From a fundamentals standpoint, we see a reduction in new supply of 20%, but a still large absolute number—about 468,000 total (340,000 market-rate/partially affordable). With job growth and population growth modest, we see a tough slog in the Sun Belt and Mountain West, modest rent growth in the Northeast and Midwest, and a softening single-family housing market in the same areas, which will improve affordability at the margins and has the potential to increase turnover slightly in multifamily. The economy will accelerate growth in GDP and productivity with inflation slightly declining along with short-term interest rate declines in the back half of the year, but with stable long-term interest rates.
What makes you optimistic about the sector for the year ahead?
There is a general public understanding that we need more housing supply, and that is becoming manifested in increased support for affordable housing, tax abatements, and loosening the regulatory burden of housing production.
This is far better than the impulse to rent control—better that more housing gets produced, restraining medium-term rent growth, than the industry becoming uninvestable.
A lot of the overleveraged deals from 2021 and 2022 at middle-level price points will need to get resolved, and refinancing activity will drive deal volume forward. New development activity will continue at a solid pace.
We have a solid, well-developed industry that thrives by understanding opportunities and driving toward them.
Which multifamily markets are on your watch list heading into 2026—for the right reasons and the wrong ones?
Good:
- San Francisco and San Jose;
- Chicago;
- Kansas City, Missouri;
- Suburban Minneapolis;
- Columbus, Cincinnati, and Dayton, Ohio; and
- Lexington and Louisville, Kentucky
Challenged:
- Austin and San Antonio, Texas;
- Phoenix;
- Portland, Oregon;
- Denver; and
- Pretty much the entire Sun Belt
With operating costs remaining elevated and capital becoming more selective, what are the top expense categories or cost levers operators should be focused on to protect NOI in 2026?
Property taxes and labor costs will continue to be key areas to focus on—and tools to drive down costs via tax appeals, procurement, and technology at every step along the way.