release edition [083]

read time [7 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:

• Software: It's Almost Here
• Questions: 6 Unanswered
• Weekly Listen: Bob Hart

It's Almost Here

Last week, I told you that my new software would have a name and that it would be launched to the waitlist by now.

But fortunately, I received some excellent feedback this week from two beta group members that I knew I needed to incorporate before opening it up publicly.

I aim to do things with excellence, and this software launch is no different, so thank you for your patience.

Now, I'm incorporating this final feedback, and I intend to unveil this secretive software that I've been writing about over the past few weeks very soon.

For now, the best way to hear about it first is by clicking here to join the waitlist.

Now, here are six unanswered questions that I'm thinking about to begin the second half of August 2026. Enjoy!

Unanswered Questions

This week was busy, so I'll keep the core of today's newsletter shorter than usual, but hopefully you still find it thought provoking.

The following are several unanswered questions that I'm thinking about as we transition from Summer to the back end of 2026.

1/ Where does rent growth go from here?

The incentive for renters remains firmly in place, with homeownership unattainable or undesirable for most current non-homeowners, while renter affordability (measured, rent-to-income %) is back to pre-pandemic levels in many cases.

This one-two punch creates a structural setup for continued rental demand and rent growth going forward. However, to play the contrarian, if domestic migration, population growth, immigration, household formation, and other demographic shifts prove to be steady headwinds for rental demand, where does that leave rent growth over the next few years?

In the same way that we're currently seeing the unemployment rate at 4.1% (despite a net loss of 23K jobs in July) because of the large numbers of people leaving the workforce, I'm wondering if we could see a similar trend unfold in Multifamily.

In such a scenario, occupancy and absorption could remain steady because of the structural setup above, but with more units fighting over a slower growing (or shrinking) pool of renter prospects, I could see a world in which apartment specials remain elevated and market rents remain suppressed longer than many anticipate.

2/ When will "the market" understand Kevin Warsh?

It seems like the market doesn't understand Kevin Warsh. Many are mistaking his silence and brevity as if it's a mistake or an omission on his part, but I see it as the exact opposite. Kevin Warsh knows that markets hate uncertainty, and he also knows that the less guidance he offers, the more uncertain the market may become.

As I think about the second and third order consequences of this behavior, I can't help but think that Kevin Warsh is getting exactly what he wants.

Let me explain.

Kevin Warsh provides little to no guidance, and less than half the FOMC commentary of his predecessor. The market doesn't like this, and this uncertainty appears to be getting priced into rising bond yields. This rise in Treasury yields steepens the curve and has the power to stifle economic growth across the yield curve.

If this occurs, then economic activity may slow, inflation would cool and Warsh would get his 2.00% CPI sooner than later, paving the way for cutting the Fed Funds Rate to r*, which I perceive to be in the 2.5-2.75% range.

The other theory, of course, is that Warsh has a supply-side view that many Keynesian thinkers simply do not. Perhaps he believes that the current AI CapEx infrastructure build-out, combined with deregulation and The Big Beautiful Bill, will lead to outsized supply-side growth and thus put downward pressure on inflation simply through the invisible hand of the market.

I'm not an economist, but I get the sense that Kevin Warsh knows exactly what he's doing, and why. For a more eloquent supply-side perspective, read Jim Thorne's recent posts on X here and here.

3/ Will "this time be different" regarding the UST?

U.S. Government debt posted its largest July deficit in history at -$432 billion, due to an acceleration in federal spending. Interest on US debt rose +$26 billion from last July's levels to $118 billion for the month. This puts total interest expense for FY2026 up to $1.17T. Interest expense has officially surpassed both National Defense and Medicare spending.

This all sounds alarming, and I acknowledge that it isn't good, but will this time be any different? The budget deficit has been an issue for decades, and somehow America keeps humming along. I'm far more interested in the increase in the budget deficit relative to other key U.S. benchmarks such as the total cap of the stock market, or the bond market, or the housing market.

Just because government spending is increasing nominally doesn't necessarily mean it is increasing relative to other measures of wealth. There are two sides of the balance sheet, and simply analyzing the liabilities in isolation can easily lead to the wrong conclusion(s).

4/ Is the Multifamily distress wave cresting?

As you can see in the table below, Multifamily CMBS delinquency climbed to 7.69% in July, up 46 basis points in a single month, 154 basis points in 12 months, and the highest reading in about nine years, per Trepp.

Whether you believe this distress wave is beginning to crest, or ever will, or something in between, what's clear is the negative trend and the potential implications on the broader market (more on this below).

I have to believe that, based on the sheer volume of transactions in 2021-2022 using extreme leverage and aggressive assumptions, that distress will become a meaningful part of every buyer's acquisition strategy in the months to come.

After all, isn't the best Seller to buy from one that is motivated?

5/ What are the looming 2nd and 3rd order consequences?

Almost all buyers are current owners, and owners don't like when their portfolio NAVs go backwards.

Thus, if the distress wave crests, and market pricing gets reset in a meaningful way, will that actually be a net-positive to market participants that are both owners and buyers?

If I own 1,000 units in Phoenix with an in-place cap rate of 5.5% today based on my 2021 purchase prices, do I really want to buy a building down the street at a 7% or 8% cap?

The law of unintended consequences is one to watch with respect to distress, and specifically, the concentration of distress within specific markets.

In the same way that rising tides lift all boats, falling tides can run all boats aground.

6/ Will AI in Multifamily snapback or accelerate further?

If you've listened to anyone on CNBC this year, you know that the themes of 2026 have been AI, data centers, compute, chips, and infrastructure. In Multifamily, everyone seems to be running around evaluating the age old question that has existed as long as software has been around: Should I buy it or build it?

Increasingly, the answer is becoming to "build it", as development costs have plummeted and custom bespoke solutions are now within the grasp of most firms.

The flip side to this coin are the hidden ramifications of that "build it" decision. If the infrastructure is owned or local, people or teams must be in place to maintain, enhance, and troubleshoot what's been built and deployed on a real-time basis. If the infrastructure is rented via an LLM, questions about rising costs, as well as data integrity and security will remain at the forefront.

There's no perfect answer, but I'm curious if the desire to "build it" will accelerate, or if Multifamily professionals will begin to realize that PropTech still has a place in the world because of the unique and valuable service it provides.

The third option, of course, is to get the best of both worlds: Pay an extremely affordable price for a third party software solution that is AI-powered and solves a valuable but unique problem for the business without the business taking on the ongoing infrastructure risk or human capital responsibility associated with having built it themselves.

I'm talking my book here, of course, but the third option is why I've decided to build and launch a Multifamily acquisitions software, because I know that software has a compounding benefit that is far more powerful than "I can have Claude underwrite my deals", and yet, I'm not a legacy enterprise that needs to charge $1,000+ per seat per month just to keep the corporate lights on.

Summary

Questions abound in the economy and Multifamily today, and these are six that I'm continuing to chew on as we settle into the back half of the year. But now I want to hear from you!

What question(s) are keeping you up at night these days?

Are you thinking about any of the six questions above differently?

Hit reply and let me know what you're thinking.

Weekly Listen

This week's listen is CBRE's Weekly Take with Spencer Levy featuring his guest Bob Hart, the founder and CEO of TruAmerica Multifamily.

Hart built TruAmerica into one of the largest workforce housing platforms in the country. He makes the case that workforce housing is still a compelling long-term hold, points to the Midwest and the New York metro as where he sees room to grow, and walks through how co-GP partnerships are getting deals funded while capital is tight.

His comment about patience and disciplined execution matter more than they have in years, which feels fitting in today's market environment.

You can listen to the full episode here.

Wrap Up

That'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!

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