release edition [078] read time [6 minutes] Welcome to The Multifamily Download, a weekly newsletter where I provide institutional insights to help you build an exceptional Multifamily career. Forwarded this email? Subscribe here. Today at a Glance:
Quick Update + AskBefore we get into today's newsletter, I wanted to share a quick project update. I've been building something for myself that completely changes how I underwrite deals. What used to take me an afternoon in a spreadsheet now takes about 10 minutes. Here's my new workflow: I drag and drop an OM, RR, or T12, then I review the auto-populated deal assumptions, size up those assumptions against the live return metrics dashboard, check the objective 0 to 100 deal score, and with a single click generate any number of deliverables including an LOI or a committee-ready investment memo. A small group of investors and brokers is beta testing it right now, and I'm opening it up publicly later this month. A select number of early users will get a discounted rate locked in for life, and I want to make sure you're on the early access list so you have the first shot at joining. Click here to get notified for early access → One favor to ask: If you underwrite deals (or wish you had the time to), hit reply and tell me the single most painful part of your current process. Your response will help shape the roadmap for what I decide to build later this year. I'll share more soon, but for now let's dive into this week's newsletter. 5 Numbers to WatchAfter reviewing my own predictions for 2026 a few weeks ago, I thought it may be helpful to review a wave of mid-year reports and data points that have been released recently. Collectively, I think they paint a picture that is difficult to capture in any single article or data point. There were five numbers that stood out to me, which I have outlined below. Are there any other data points that you're watching? 1/ 0.5% This is Yardi Matrix's new national rent growth forecast for all of 2026, with just 1% penciled in for 2027. National advertised rent sat at $1,767 in May. At the same time, Yardi revised its 2026-2028 completions forecast upward, again. This is the pattern I flagged in TMD 058: Supply is falling more slowly than predicted, while demand is absorbing more slowly than predicted. Yes, Q2 data showed improvement on both fronts, but many markets are still caught in "no man's land" with supply slowing rapidly but with very little operational improvement to show for it (yet). 2/ 4.5% This is the national vacancy rate, and while it's strong, it appears to still be searching for solid ground. According to RealPage occupancy was at 95.5% in the 2nd quarter, up for a second consecutive quarter and a bit ahead of the decade average. But, as demand trails new supply, occupancy was still down 20 basis points for the year. In TMD 074 I shared that lease trade-outs across some assets had turned from negative to flat for the first time in years, with traffic up year-over-year. Prediction #1 from January (weak first half, recovery in the second half) is tracking, and perhaps the demand side of the market is showing signs of a resurgence. 3/ 1.3 million This is the number of units currently in lease-up nationally, according to Yardi. This is why the strong but oscillating 4.5% vacancy percentage from number two above will not immediately convert into pricing power in some higher supply markets. Many (most? or all?) active lease-ups are competing with one another, offering heavy concessions, and it even appears that some operators are afraid to be the first mover to pull back. I first coined the term "incentivized demand" nearly a year ago in TMD 033, and the mechanism has not changed: Headline demand built on 6-8 weeks free is demand with an asterisk. Unfortunately, stabilized owners are effectively subsidizing the lease-up down the street until this supply pipeline finally clears. 4/ 7.23% This is the Multifamily CMBS delinquency percentage in June, according to Trepp. It was up 28 basis points from May, and 132 basis points above a year ago, and is the largest year-over-year increase of any property type Trepp tracks (table shown below). Read that last sentence again. The rate remains below the peak from earlier this spring, but the trend is unmistakable. In TMD 076, distress stopped being theoretical and put a proverbial face to the name. And, the delinquency data says that the wave of distress behind these recent headlines has not crashed on the shore just yet. For what it's worth, my prediction #5 (that overall YoY sales volume rises as distress materializes) remains one that I'll be watching closely in the second half of 2026. 5/ 16.4 percentage points This is the spread between San Francisco (+10.6%) and San Antonio (-5.8%) in year-over-year rent growth, according to RealPage (shown below). New York is at 3.2%, Chicago is at 2.9%, while Austin, Phoenix, Denver, San Antonio, and Tampa all sit in negative territory. This K-recovery in the Multifamily sector is why I wrote in TMD 075 about the five-driver market screen that I find helpful when selecting markets (supply, demand, job growth, AMI and SFR prices, political climate). Summary The mid-year data confirms a diverging national Multifamily market. It's clear that absorption is genuinely improving and vacancy is relatively stable, but 1.3 million units in lease-up and continued economic strain on many consumers (see: 60% of consumer spending by top 20% wealthiest Americans) means that rent growth will remain challenged in markets with a supply overhang. Meanwhile, distress continues to build beneath the surface, and the gap between the best and worst rent growth markets is at it's widest breadth in the recent past. Actionable Takeaway Yardi's 0.5% national rent growth number is a far cry from the typical 3% that many underwriting models show for year one of a hold period. If your market is delivering more than 3% of stock this year, it may be appropriate to assume flat effective rents through early or mid 2027. Occupancy Before RentsMy biggest takeaway from the data above is the reminder that sequencing matters during your recovery. Meaning, occupancies in respective markets must stabilize before rent growth has a chance at reappearing. For better or worse, this reality may change the operator playbook for the next two quarters. Chasing new-lease trade-outs right now means fighting 1.3 million lease-up units and near record levels of concessions. To me, the fight that is worth fighting is retention since it's almost always more cost-effective to retain an existing resident than lease the same unit to a new one. The data backs this up with the renewal share of leasing activity already running at record levels. The Renewal Cliff I wrote about in TMD 063 has (so far) been resolving itself relatively gently in the Western U.S. markets, as I noted in TMD 074. But the second half of the year presents a item to watch: bad debt. The consumer data continues to bifurcate, and workforce assets where residents sit above 30% rent-to-income will feel it first. Even if physical occupancy improves, the possibility exists that economic occupancy may remain flat, or fall. More heads in beds does not automatically equate to a higher NOI. Summary Green shoots are emerging as the broader Multifamily sector is showing signs of life once again. However, there's still work to be done on both sides of the supply-demand equation. Until specific markets find their equilibrium, retention will remain a key area of focus. Actionable Takeaway Start your renewal conversations as early as you are comfortable, and initiate verbal conversations with residents that have embedded gain-to-leases before blindly sending a renewal e-sign request. Also, knowing the rent-to-income ratios for your workforce assets can be empowering (or alarming) as it relates to renewals. Internally flagging residents above a certain rent-to-income ratio could allow you to be more proactive in avoiding bad debt issues. Weekly ListenThis week's listen is the Walker Webcast featuring host Willy Walker and quarterly guest Dr. Peter Linneman. Dr. Linneman's quarterly conversations with Willy are the closest thing the CRE industry has to a state of the union. This episode covers the economy, capital markets, and where he sees the opportunities and risks for CRE investors in the second half. Timely, informative, and always worth the listen. You can listen to the full episode here. Wrap UpThat's it for today. I hope you found this edition of The Multifamily Download insightful. Consider sharing this link to The Multifamily Download with a friend or colleague. Your feedback is appreciated, so feel free to reply anytime. Thanks for reading. See you next week! Forwarded this email? Sign up here. Join me on LinkedIn | Twitter | Website |
The Multifamily Download · July 11, 2026
5 Mid-Year Numbers to Watch Closely
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