The Biggest Risk To Multifamily Investors Today [That No One's Talking About]

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The Biggest Risk To Multifamily Investors Today [That No One's Talking About]

Break Into CRE 09.04.2026 1 469 просмотров 40 лайков

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The Biggest Risk To Multifamily Investors Today [That No One's Talking About] // Five years ago, if you were to tell a group of multifamily investors that 9 out of the top 10 rent growth markets in the US in 2026 would be in the Midwest and Northeast, most of them would have laughed you out of the room. But fast forward to today, and that's exactly what's happening, with many cities in the Sunbelt and the West seeing major rent declines after dominating the industry for decades. And at the same time that this is all playing out, there's also a really alarming trend happening in the background right now that I don't think enough people are talking about. So in this video, we'll cover what that trend is, why it matters for multifamily investors, and why performance across this asset class is varying so much between different markets. 💻 TRAINING & COURSES 💻 Enroll in the FREE Break Into CRE Real Estate Financial Modeling Crash Course here: https://www.breakintocre.com/free-crash-course Enroll in any Break Into CRE course here: https://breakintocre.com/courses/ Get access to all Break Into CRE courses, all models, and additional one-on-one support with a Break Into CRE Academy membership: https://breakintocre.com/the-academy **💰 MY FAVORITE REAL ESTATE INVESTMENT PLATFORMS 💰 EquityMultiple: https://equitymultiple.4drrzr.net/c/2975738/751081/10943 RealtyMogul: https://realtymogul.pxf.io/c/2975738/1008102/13202 🕒 Timestamps 🕒 0:00 Introduction 0:57 Markets in Danger 2:44 Surprising Winners 4:15 The Biggest Risk To Multifamily Today 6:10 Multifamily Tailwinds #multifamilyinvesting #realestateinvesting *Nothing in this video should be construed as tax, legal, accounting, valuation, or financial advice or recommendation. All information in this video is intended solely for educational purposes, and you are advised to consult with your own personal professional advisors regarding your personal investment decisions. **AFFILIATE DISCLOSURE: Some of the links in this description are affiliate links, meaning, at no additional cost to you, we may earn a commission if you click through and make a purchase and/or create an account. Research and articles referenced in this video: https://www.yardimatrix.com/blog/national-multifamily-market-report/ https://www.cushmanwakefield.com/en/united-states/insights/us-marketbeats/austin-marketbeats https://www.zillow.com/research/data/ https://www.cushmanwakefield.com/en/united-states/insights/us-marketbeats/san-francisco-marketbeats https://www.census.gov/newsroom/press-releases/2026/population-growth-slows.html https://www.census.gov/newsroom/blogs/random-samplings/2026/01/historic-decline-in-net-international-migration.html https://www.cbre.com/insights/books/us-real-estate-market-outlook-2026/multifamily https://www.nmrk.com/insights/market-report/4q25-u-s-multifamily-capital-markets-conditions-trends https://www.yardimatrix.com/publications/download/file/8370-MatrixMultifamilySupplyForecastUpdate-Q12026 https://www.multifamilydive.com/news/apartment-supply-multifamily-completions-distressed-sales/753869/ https://naahq.org/news/2026-apartment-housing-outlook https://www.brookings.edu/articles/reduced-immigration-slowed-population-growth-for-the-nation-and-most-states-new-census-data-show/ https://www.cbreim.com/insights/articles/digging-out-of-the-us-housing-affordability-crisis https://data.sca.isr.umich.edu/charts.php https://fred.stlouisfed.org/series/MORTGAGE30US

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Introduction

5 years ago, if you were to tell a multifamily investor that in 2026, nine out of the top 10 ranked growth markets in the US would be in the Midwest and Northeast, they would have laughed you out of the room. But, fast forward to today, and it's exactly what's happening. Cities that were considered to be some of the lowest growth areas of the country for decades are now performing better than the majority of markets that dominated the industry in the 2010s and early 2020s, with many cities in the Sunbelt and Western United States seeing occupancy rates spike and significant rent declines. And at the same time that this is all playing out, there's also a really alarming trend happening in the background right now that I don't think enough people are talking about. And in this video, I want to walk through what that trend is, why it matters for multifamily investors, and why performance across this asset class can vary so much between different markets.

Markets in Danger

So, let's start with the markets that are really in trouble right now. And this is primarily due to a huge amount of overbuilding in the multifamily sector and a lot of new supply that still hasn't been absorbed. According to the Yardi Matrix February 2026 multifamily market report, Austin, Phoenix, Tampa, and Denver all saw rents fall by over 3% year-over-year, and almost half of Yardi Matrix's top 30 markets recorded occupancy drops of 50 basis points or more. And although many of these markets are still seeing material increases in demand, the record high amounts of new supply delivered into these metros over the last few years has driven rents down and vacancy levels up. As of February of 2026, all of these markets saw new completions as a percentage of the total existing multifamily inventory in the area coming in at more than 4% with Austin leading the entire nation at 7. 9%. And in large part due to this influx of new supply, according to Zillow research, Austin has seen average multifamily family rents drop from $1,722 per month back in August of 2022 to just $1,436 per month at the end of February this year, which represents an almost 17% decline in rents over a 3 and 1/2 year period. Austin's multifamily vacancy rate also reached double digits at the end of 2025, coming in at 10. 6% according to Cushman & Wakefield, with almost 50,000 new units delivered in the Austin metro in just the last 2 years alone. And even though population growth in the Sunbelt region has been very strong over the last few years, other markets like Las Vegas, Dallas, Charlotte, Orlando, and Nashville all saw rents fall in 2025 due in large part to overbuilding in each of these metros.

Surprising Winners

Now, it's not all bad news for multifamily investors at the national level today, and to a lot of people's surprise, the Northeast and Midwest regions of the country have seen some of the strongest multifamily performance throughout the entire US. According to Yardi Matrix, New York, Chicago, Detroit, Kansas City, and Philadelphia all saw year-over-year rent increases of at least 1 and 1/2% in February, with Detroit, Chicago, and the Twin Cities metros all expected to see rent growth of over 4% over the next 12 months. And according to the National Apartment Association's 2026 outlook report, the Northeast as a whole is projected to see annual rent growth of 4 to 5% in 2026, and the Midwest is expected to see rent growth between 3 and 4 and 1/2% by the end of this year. And even though population growth in these markets hasn't been anything to write home about, the lack of new supply in these metros has made even modest demand growth show up a lot in these numbers, with New York, Kansas City, and Philadelphia seeing multifamily inventory growth of less than 2 and 1/2% in 2025, and Chicago and Detroit seeing multifamily inventory growth of less than 50 basis points during this time. The key takeaway here is that even the cities that have seen the strongest demand growth over the last few years just can't keep up with the levels of new supply being delivered, and the markets that were ignored by developers due to a perceived low growth potential are now seeing some of the strongest fundamentals throughout the entire US.

The Biggest Risk To Multifamily Today

Now, with all of that said, beyond just supply and demand fundamentals, I also think it's really important to talk about something that many investors might be overlooking right now. And this is the major slowdown in population growth we've seen recently and the potential impact of this slowdown on multifamily apartment demand. According to a January 2026 press release from the US Census Bureau, the US population grew by only 1. 8 million people, or just 50 basis points, over the previous 12-month period between July 2024 and July 2025. This was the slowest population growth we've seen since 2021, and while birth and death numbers were relatively stable from the previous year, this change of pace was primarily the result of what a representative from the US Census Bureau called a historic decline in net international migration. Net international migration fell from 2. 7 million people in 2024 down to just 1. 3 million people in 2025, with projections that this figure could drop to just 321,000 people in 2026 if current trends continue. And if population growth continues to slow, demand for rental housing will also very likely decrease as a result, which could be especially challenging for markets that are already dealing with an oversupply of new units. From July of 2024 to July of 2025, the Southern United States as a region saw population growth of just 90 basis points, which was the lowest figure we've seen over the last 5 years, at the same time that we're coming off a record high number of new deliveries in this area of the country. And even though international net migration drops appear to be the main threat to apartment demand we're seeing right now, in the state of Florida, net domestic migration dropped to just 22,000 people in 2025, down from 183,000 people in 2023, and 310,000 people in 2022, which has also hurt apartment demand in multiple parts

Multifamily Tailwinds

of the state. Now, while these trends are all pretty concerning, multifamily investors still have a few major things going for them. One of the biggest being the sky-high cost of homeownership today, which is making apartments look like a much more affordable option to people looking for a place to live. According to Newmark's Q4 2025 US Multifamily Capital Markets Report, at the end of last year, it was almost $1,200 per month more expensive to own versus rent a residential housing unit, which is a spread that's almost three times the long-term national average. And according to the University of Michigan's most recent buying conditions for houses survey, consumers feel the worst they felt about home buying since the early 1980s, which was a time when we saw a double-digit unemployment rates and interest rates that were in the high teens. It's also important to point out that the current multifamily construction pipeline is significantly lower than it was just a few years ago, with Cushman & Wakefield reporting that this is now about 50% below the peak of the cycle, with less than 470,000 units expected to be delivered annually from 2026 to 2028, which is down from almost 700,000 units delivered back in 2024 alone. The key thing I want you to take away from this video is that while the multifamily supply story is what's making all the headlines right now and driving a lot of the current issues that multifamily investors are seeing today, the demand story and how international migration numbers might move over the next 12 to 24 months could be just as impactful if things don't change. And if you're watching this and you are an investor looking to analyze your own multifamily deals, or you're looking to land a job multifamily focused investment, development, or brokerage firm, make sure to check out our all-in-one membership training platform, Breaking into CRE Academy. A membership to the academy will give you instant access to over 120 hours of video training on real estate financial modeling and analysis. You'll get access to hundreds of practice Excel interview exam questions, sample acquisition case studies, and you'll also get access to the Breaking into CRE Analyst Certification Exam, which covers topics like real estate acquisition and development modeling, commercial real estate lease modeling, equity waterfall modeling, and many other real estate financial analysis concepts that will help you prove to employers that you have what it takes to tackle the responsibilities of an analyst or associate at a top real estate firm. And if you liked this video and want to see more content on the channel on the multifamily sector specifically, make sure to hit the like button and let me know. And let me know in the comments which multifamily markets you think have the most potential right now. As always, thanks so much for watching, guys. I hope you found this helpful. Subscribe to the channel if you haven't already to see more videos like this every single week, and I'll see you in the next video.

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