release edition [062]

read time [9 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:

• Fed: Unpacking The Decision
• Predictions: My Q1 Scorecard
• Supply: A Data Surprise
• Weekly Listen: TreppWire 385

The Fed

On Wednesday, the Federal Reserve held the federal funds rate at 3.50% to 3.75% for the second consecutive meeting, voting 11-1 in favor of holding steady.

While the decision to hold was not a surprise, the Fed added a new variable to their policy equation when the Iran conflict was explicitly cited in the Fed's post-meeting statement.

Chair Powell acknowledged that "the implications of developments in the Middle East for the U.S. economy are uncertain."

That is the Fed's polite way of saying: We don't know what this will do to inflation, and until we do, we're not adjusting our policy stance.

The Fed now expects 2.7% inflation for 2026, up from 2.5% in December. GDP was revised up slightly to 2.4%. The dot plot still shows one rate cut this year, but 7 of 19 participants now see zero cuts in 2026, up from 6 in December.

An uncertain (and therefore status quo) Fed has implications for those of us in Multifamily.

First, the timeline for further rate relief just became less clear.

SOFR is not coming down meaningfully until the Fed cuts further, and the Fed is not cutting until inflation moves lower, and inflation may not move lower if oil prices stay elevated.

Second, February CPI came in at 2.4% year-over-year, unchanged from January and in line with expectations.

Shelter costs rose just 0.2% month-over-month. Energy rose 0.6%. But it's worth noting that the February inflation data was gathered before the Iran conflict began.

The next print on April 10 will be the one to watch.

Third, the Kevin Warsh transition to Fed Chair now contains an element of uncertainty.

It's possible that some or many in the Senate decide to block Kevin Warsh's confirmation in the Banking Committee until the DOJ's investigation into Powell is resolved.

Powell said Wednesday that he has "no intention of leaving the board until the investigation is well and truly over."

In TMD 052, I predicted that the yield curve would be volatile in 2026.

I did not expect that volatility to arrive via a war in the Middle East, but here we are.

My thesis remains unchanged: All roads still lead to a lower Fed Funds Rate, eventually.

But "eventually" may be later than the market was pricing in 30 days ago.

Summary

The Fed held at 3.50% to 3.75% as expected, but the Iran conflict has added a new layer of uncertainty to the rate path. Inflation projections moved higher, the Warsh transition may be delayed, and those of us in Multifamily should likely plan for short-term rates to hold through at least June.

Volatility creates opportunity, but only for those who are prepared.

My Q1 Scorecard

In TMD 052, I shared 10 Multifamily predictions for 2026.

As we approach the end of Q1, I thought a quick check-in could be worthwhile.

Honestly, I often hold my breath as I share my personal predictions out into the public domain, but I've come to terms with the reality that accountability is what separates analysis from speculation.

With that in mind, below is where each prediction stands as of mid-March 2026.

1/ Leasing to mirror 2025 in reverse (weak 1H, recovery 2H) — Tracking

The weak first half thesis is playing out. The BLS reported that the U.S. economy lost 92,000 jobs in February while economists expected a gain of 50,000 to 60,000. The unemployment rate ticked up to 4.4%.

Spring leasing is starting soft, consistent with my prediction. Will a recovery materialize in 2H 2026? We'll see.

2/ Rent growth to compress vs 2025 — Tracking

National rent growth is technically positive at 0.4% year-over-year per CoStar, but headline numbers can be misleading.

According to RealPage Market Analytics, 16.6% of stabilized apartments were offering concessions in January 2026 at an average discount of 10.7%. That is the highest monthly usage since mid-2014.

When a 10.7% discount is applied to the asking rent, effective rent growth looks materially different. More data is needed, but the direction is consistent with my prediction.

3/ Renewal change to outpace new lease rent growth — Early Confirmation

Renewal lease rents have climbed roughly 3.6% as of early 2026, outpacing largely flat move-in rents since Spring 2023. CBRE data shows that renewals now account for 57% of all leasing activity, up from 48% in 2005 and 51% in 2015.

Existing residents are still choosing to stay, and this may be the guardrail keeping the Multifamily train on the tracks.

4/ Resident retention up YoY — Tracking

Retention remains strong. As I wrote in TMD 060, the value proposition for moving has diminished as concessions burn off and residents realize that renewing is often cheaper than relocating at market rates.

​RealPage's year-end analysis confirmed that retention climbed to near-record levels in 2025, and early 2026 data suggests this trend is continuing.

5/ Sales volume up as distress materializes — Early Signs

​CRED iQ projects the overall CMBS distress rate could reach 14.5% to 15% by December 2026. The January distress rate hit 11.98%, a 148% increase over 43 months. Among the $40.1 billion in specially serviced loans with defined workout strategies, foreclosure dominates at 39.1%.

Servicers are, in CRED iQ's words, "taking an increasingly aggressive posture toward distressed assets."

Deal flow from distress has not yet surged, but the pipeline is building.

6/ Yield curve will be volatile — Confirmed

This one has played out through mechanisms I did not anticipate. As I noted in TMD 057, the 10-year Treasury rallied 20+ basis points in early February.

Then Iran happened. Oil prices are surging, inflation projections have moved higher, and the Fed appears frozen.

The March FOMC dot plot shows growing disagreement among members, with 7 of 19 now expecting zero cuts this year.

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

This one was not a bold call, but the speed has been notable. In TMD 059, I shared 5 governance questions every operator should ask before deploying A.I. tools. Adoption is accelerating faster than vendors can be reasonably evaluated.

This remains a space to watch closely.

8/ Syndicator struggles go public — Early Signs

​CRED iQ data reported by Multifamily Dive shows bank-reported multifamily delinquency at community, commercial, and savings banks hit 1.37% in Q3 2025, the highest since the post-GFC recovery.

In dollar terms, total delinquent MF loan balances grew from $2.4 billion in Q3 2023 to nearly $8.9 billion in Q3 2025.

The headlines are coming. They just haven't all arrived yet.

9/ Operators scale down to middle market — Tracking

I heard this firsthand at NMHC in January. Institutional operators are adding middle market pursuits to their pipelines as technology and A.I. allow existing teams to cast a wider net.

This trend is underway but difficult to quantify with public data until further notice.

10/ Soft SFR for-sale market hurts lease-ups — Confirmed

As I wrote in TMD 057, existing home sales fell 8.4% in January to just 3.91 million annualized. For reference, existing home sales in 1995 were 3.85 million when the U.S. population was roughly 90 million fewer than it is today. (Feel free to read that again).

The lock-in effect is loosening (see: TMD 053), new construction incentives are mounting, and the for-sale market is competing more directly with Multifamily lease-ups.

The Bottom Line

Six predictions are confirmed or tracking, while four are still developing.

That is a better batting average than I expected at this point, but I am watching predictions #2, #5, and #8 closely because all three could accelerate quickly in Q2 and Q3 as bridge loan maturities increase and spring leasing data rolls in.

I will likely revisit the full scorecard again at mid-year, so stay tuned on how these trends continue to evolve.

What are you seeing unfold thus far in 2026?

Hit reply and let me what you're watching heading into Q2.

Housing Starts

Want a number that deserves more attention than it's getting?

Here it is: Bloomberg reported last week that U.S. housing starts rose 7.2% in January to an annualized pace of 1.49 million, the fastest pace in nearly a year, boosted by multifamily projects.

The result exceeded every estimate in the Bloomberg survey.

The narrative in recent months has been that supply is declining and that relief to supply-side woes is on the way.

However, it appears that narrative may only be partially true.

In TMD 056, I shared Yardi Matrix's Q1 2026 supply forecast, which revised 2026, 2027, and 2028 delivery projections upward. The forecast no longer anticipates new supply bottoming below 400,000 units in 2027 as previously expected.

In TMD 058, I described what I called the "one-two punch" to watch: Supply is falling more slowly than predicted, and demand is absorbing more slowly than predicted.

January's housing starts data reinforces this concern because starts are not collapsing, but rather they are stabilizing at a level that, while lower than the 2022 peak, is still well above historical norms.

The takeaway for Multifamily owners and investors is simple: Do not assume the supply picture will fix itself anytime in the immediate future.

In my opinion, submarket selection and supply discipline remain the most important variables in deal pursuits and underwriting today.

Summary

Housing starts surprised to the upside in January, driven by multifamily. The "supply is declining" narrative is more nuanced than the headlines suggest. As I wrote in TMD 056, even a moderating delivery environment in 2026 is still roughly 48% above the pre-pandemic historical baseline. Plan accordingly.

Weekly Listen

This week's listen is the latest episode of The TreppWire Podcast, hosted by Lonnie Hendry, Stephen Buschbom, and Hayley Collier.

In this episode, the Trepp team breaks down the Fed's decision to hold rates steady, Powell's use of the word "transitory" in the context of war-driven inflation, and what the wait-and-see posture means for CRE financing conditions. They also cover retail property value reductions, the residential market, and the broader economic slowdown narrative.

If you read my Fed section above and want to go deeper on the debt side, this is your episode.

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!

Forwarded this email? Sign up here.

Join me on LinkedIn | Twitter | Website​