release edition [076]

read time [8 minutes]

Welcome to The Multifamily Download, a weekly newsletter where I provide institutional insights to help you build an exceptional Multifamily career.

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Today at a Glance:

• Predictions: My Mid-Year Scorecard
• Distress: Is The Wave Cresting?
• 2H26 Outlook: What I'm Watching
• Weekly Listen: TreppWire 403

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My Mid-Year Scorecard

Back in January, in TMD 052, I shared my 10 Multifamily Predictions for 2026. In TMD 062, I graded them at the end of Q1 and I concluded that six predictions were confirmed or tracking with four still developing. I promised a mid-year revisit, and here we are in mid-2026.

Today's newsletter is about accountability and transparency, as I'm a believer that this is what separates thoughtful analysis from generic guesswork. Below are where all ten of my January 2026 predictions stand as of late June. Enjoy!

1. Leasing mirrors 2025 in reverse, with rents bottoming late Q2 / early Q3. Tracking.

This was the boldest call on timing, and so far the timing appears to be holding. The first half of 2026 was soft, as predicted, as evidenced by continued labor market softness. As I shared in TMD 074, lease trade-outs across some assets in higher supplied markets turned from negative to flat, and in a few cases slightly positive, for the first time in years.

This is exactly the bottoming window I said I'd be watching for back in January. The second half recovery is the part of my prediction that is still unwritten.

2. Rent growth compresses versus 2025. Tracking.

Yardi Matrix put the national average advertised asking rent at $1,767 in May, up just 0.2% year-over-year, and now forecasts full-year 2026 rent growth of roughly 0.5%. With close to 1.3 million units still in lease-up, the supply drag on organic market rent growth that I keep writing about is doing precisely what I expected to the top line. It remains to be seen if the breadth between high-low market rent growth narrows YoY, but I still have a feeling it will.

3. Renewal change outpaces new lease growth. Confirmed.

Renewal rents climbed roughly 3.6% into early 2026 while move-in rents stayed largely flat, and renewals now make up about 57% of all leasing activity per CBRE, up from 51% a decade ago. Although concessions are prevalent, moving is still painful and costly, so an elevated percentage of residents are electing to stay put.

4. Resident retention up YoY, again. Tracking.

Retention is holding near the record levels RealPage flagged for 2025. The Renewal Cliff I described in TMD 063, the wave of concession-heavy 2025 leases hitting their renewal windows this quarter, is resolving more gently than I feared, at least in our Western U.S. markets (more on that in TMD 074).

5. Sales volume up as distress materializes. Tracking.

I'll split this one honestly. The distress portion of this prediction is beginning to materialize. CRED iQ put the CMBS multifamily distress rate at 10.95% in May, up from 10.3% a year ago, with the overall CMBS distress rate at 11.86%. The volume portion of the prediction, however, is still developing. More on this in the next section, because it's the one that moved the most since my previous prediction update in March.

6. Yield curve will be volatile. Confirmed.

I did not expect the volatility to arrive through a war, but here we are. May headline CPI printed at 4.2% due to an energy shock, prediction markets swung to roughly 40% odds of a 2026 hike, and the 10-year remains elevated in the 4.40% range. Patient buyers have been handed exactly the kind of dislocation that I thought would unfold.

7. A.I. goes mainstream in CRE. Confirmed.

Adoption keeps outrunning the ability to vet the tools, which is why I wrote the five governance questions in TMD 059. The technology is now being woven into sourcing, underwriting, and leasing for most serious operators. Oh, and not to mention several big name partnerships that have been announced including this one between Blackstone & Anthropic.

8. Syndicator struggles go public. Confirmed.

In January I wrote, "Pain is coming, and I expect it will begin to emerge in 2026." It has emerged, with names attached. I have vowed not to "slam dunk" on my peer group publicly, but objective facts that are publicly available are worth covering because, well, failure is life's best teacher. More below.

9. Operators scale down, not up. Tracking.

The move toward the middle market that I anticipated would accelerate thanks to the acceleration and adoption of technology is showing up in the data. Manager consolidation will continue, even if it's somewhat gradual.

10. Soft for-sale SFR market hurts lease-ups. Confirmed.

The lock-in effect is loosening slowly, but existing home sales remain near multi-decade lows, and the for-sale market keeps competing with Multifamily assets (both stabilized and lease-ups) at the margin.

Summary

Six months in, five of my predictions are confirmed and five are still tracking with no outright misses yet. The back half of the year is where several of these predictions will be truly tested. The honest view is that the macro and distress calls have aged better than the recovery-timing calls, which still require fundamentals to improve during the second half of 2026.

Actionable Takeaway

Pull your own January assumptions and grade them the same way. If you underwrote 2026 with rent growth above 1% or assumed a clean back-half recovery, this is the moment to stress those assumptions. For LPs, ask your sponsors which of their underwriting assumptions have adjusted, why they were adjusted, and how they're adjusting.

Distress Goes Public

Prediction #8 is the one that moved the most since my Q1 scorecard, so I thought it earned its own section today.

In TMD 062, I could only point to early signs: bank multifamily delinquency at 1.37% in Q3 2025, the highest since the post-GFC recovery, and total delinquent balances climbing from $2.4 billion to $8.9 billion over two years.

I wrote that the headlines were coming, but just hadn't all arrived.

Well, they've arrived.

In June, S2 Capital was hit with roughly $140 million in new foreclosures on top of a $78 million notice the month before, with three Dallas-Fort Worth properties flagged for July auctions. A feeder fund reportedly warned investors in S2's multifamily REIT, a vehicle built in 2024 to buy time for rates to fall, to "expect a full loss of capital."

Nitya Capital took foreclosure notices on three North Texas buildings as part of a roughly $70 million distress patch, though its founder has reportedly advanced more than $100 million to support the broader portfolio. Texas loans flagged for foreclosure totaled about $1.3 billion in June, the highest monthly figure The Real Deal has tracked since it started keeping count in May 2025.

This is the public phase of the distress wave I've been writing about since the bridge-debt vintage of 2021 and 2022 first started maturing. It is also concentrated, and I do not anticipate that it will be systemic or universal.

As I noted in TMD 065, the distress has clustered in a handful of markets, and the names in the headlines share a profile: peak-price entries, heavy floating-rate or short-fixed leverage, and Sunbelt markets dealing with record-levels of new supply.

I want to be careful here. Watching peers struggle is not something to celebrate, and many of these operators are good people who made reasonable bets in a different rate world.

As I framed it in TMD 066, the pain for some is ultimately opportunity for others. Fundamentally, this is the mechanism by which cycles operate, and it is why disciplined buyers with dry powder are poised to benefit.

Summary

The syndicator distress I flagged in January is now playing out in public, with named firms, named properties, and a record month of Texas foreclosure filings. It is concentrated in the peak-price, high-leverage, high-supply corner of the market rather than spread evenly across the asset class.

Actionable Takeaway

If you have capital and patience, build your distress-sourcing relationships now with special servicers and brokers working these deals. If you're an LP, this is the cycle that rewards sponsor selection, so ask how a sponsor's existing portfolio is levered and when their loans mature before agreeing to participate in their newest offering.

What I'm Watching

A scorecard is only honest if I tell you where I am wrong, or could still be wrong.

The biggest open question is the back half of prediction #1 related to the 2H 2026 recovery. The green shoots in property-level operations are emerging, but as I wrote a few weeks ago, they're growing in uneven soil.

The June 3 Beige Book and the New York Fed both describe a consumer splitting in two, with lower-income households showing real strain. That is the K-Economy I've written about since TMD 004, and it caps how fast a workforce-housing recovery can occur even as trade-outs begin to (albeit slowly) turn positive.

The second open question is whether all this distress (prediction #5) actually converts into transaction volume, or whether lenders keep extending and pretending into 2027. Foreclosure filings are notable, but if rates remain sticky because of the ripple effects of the recent energy price and headline CPI shock then many of these REO assets may not sell in the near term.

The data, unfortunately, has rewarded my near-term bearish macro calls and the patient-buyer setup. My recovery predictions need the second half of the year to rebound positively, so I suspect we'll know more by the time I write the Q3 scorecard in a few months.

Summary

The predictions that I'm least certain about are the ones that depend on the second half of the year. It remains to be seen if leasing actually recovers and whether distress actually transacts. I suppose only time will tell.

Actionable Takeaway

Underwrite the back half of 2026 with caution instead of conviction. Keep your downside cases defensible, watch weekly collections at workforce assets, and keep an eye on green shoots. Once we see a few consecutive quarters of broadening fundamentals improving then I expect capital to begin pouring back into the Multifamily sector in a meaningful way.

Weekly Listen

This week's listen is Episode 403 of The TreppWire Podcast, hosted by Trepp's Lonnie Hendry, Stephen Buschbom, and Hayley Collier.

The team digs into Trepp's research on the 2021 multifamily vintage and brings it to life with a case study on the 10X Living at Weston loan as it approaches maturity, which is exactly the peak-price, high-leverage profile I described in the distress section above. They also cover new Fed Chair Kevin Warsh's hawkish turn after the latest inflation data, the lending shift toward private credit, and Morgan Stanley's reported $1.3 billion office bet in Dallas.

You can listen to the full episode here.

Wrap Up

That's it for today. We're six months into 2026 and my 10 predictions are still holding up.

If this scorecard helped you grade your own 2026 assumptions, please forward it (or this link) to a friend or colleague.

How are your own January predictions holding up midway through 2026?

Your feedback is appreciated, so feel free to reply anytime.

Thanks for reading. See you next week!

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