Quick Take: In my 2026 multifamily predictions, I see a market slowly regaining momentum after two turbulent years. I expect AI to reshape the economy, interest rates to stabilize between 3.6% and 4.6%, and rent growth to rebound by 2027 across Origin’s Sun Belt and Mountain markets. Construction costs and operating expenses should remain flat as new supply fades, setting up disciplined developers for success. And I believe patient, well-capitalized managers—and investors—will be rewarded as the next upcycle begins.
Last year, I opened my 2025 predictions with cautious optimism. Multifamily fundamentals were resilient, and I believed that patience would be rewarded. My 2026 outlook is similar, even as the year holds many possible outcomes.
The disruption of the longest shutdown in the U.S. government’s history, along with unpredictability amid tariff and trade policy shifts, has kept businesses on reactive footing. The economy has proven sturdy, and the 2026 mid-term elections could reshape that dynamic—or intensify it. Either way, the volatility is keeping planning horizons short and long-term outlooks flexible.
Redefining Productivity in 2026
One variable dwarfs the rest. In 2026, artificial intelligence won’t just amplify human work; increasingly, it will substitute for it. The near-term impact may be efficiency, not innovation, pressuring white-collar employment, capping wage growth, and exerting deflationary pressure on rents. That seeming paradox—GDP holding up while labor incomes struggle—would challenge hiring and pricing, requiring every company seeking to remain competitive to justify why a person, rather than a machine, should do a given job.
A recovery in the apartment housing real estate sector is underway but emerging more slowly than we anticipated a year ago. The supply wave generally kept rent growth flatter for longer, but I see reason for optimism in our target markets as deal activity and development re-emerge. Even with tariff uncertainty, I expect the steep decline in construction starts to keep costs flat.
This year, I’ve decided to turn it up a notch with 11 predictions instead of my usual 10. But one thing won’t change: My purpose in publishing in my 2026 multifamily outlook is to provide accountability—I grade myself on accuracy and publish the results—clarity, and continuity for our investors and partners. With that, here are my predictions for 2026 and the key forces I believe will shape them.
1: Artificial intelligence will begin meaningfully disrupting employment and productivity without having a measurable impact—yet—on GDP.
We are in the infrastructure phase of AI, with well-capitalized companies spending billions to build data centers, computing power and the electrical grid to support it. This is fueling growth similar to the internet’s late-1990s period. My base case for 2026 is slightly slower GDP expansion than the roughly 3.8% pace seen recently. But I don’t expect a recession—even with deflationary effects on wages and disruption to mostly white-collar jobs. As businesses incorporate AI, the impact on bottom lines and potential for job creation is unclear.
2: Origin’s target markets are positioned for a broad rent recovery, with January 2027 rent growth forecasts from 2.8% to 5.7%.
Across our target markets, the outlook for 2026-27 is steady recovery as the supply of apartment units declines, absorption improves and rent growth reaccelerates. According to Multilytics®, our proprietary AI model that forecasts year-over-year rent growth for this sector, our top three markets will be Charlotte, Houston and Las Vegas.
Charlotte leads with a projected 5.7% rent increase supported by resilient absorption and a 40% decline in new starts. Houston follows with more than 4.9% rent growth, benefiting from a shallow rent decline cycle and limited construction. Las Vegas is close behind at nearly 4.9%; it is seeing renewed strength with population growth and restricted development.
Austin trails with a 2.8% increase. The construction pipeline and persistent concessions weigh near-term performance, with stability returning later.
3: Interest rates will hover between 3.6% and 4.6%.
Interest rates will remain between 3.6% and 4.6%, with no expectation of drastic cuts or hikes. We’re facing extraordinary debt supply—about $38 trillion in total federal debt, with roughly one-third rolling over every year plus approximately $1.8 trillion in annual deficits. Up to $15 trillion in bonds need to find buyers each year, making it difficult for rates to fall much. Unknowns include the extent to which AI adoption lowers labor costs and inflation, and the market appetite for U.S. debt. But the Federal Reserve has acted responsibly, and the economy is resilient. Even with front-end rates remaining higher than two-year yields, the current yield curve signals a balanced long-term outlook.
4: Multifamily fundamentals will strengthen, and the affordability gap will stop expanding but remain wide.
I see 2026 as the start of a rebalancing phase. The market is working through the supply of apartment units created by 2021-22 developments. With that pressure easing, concessions will decline and rent growth will improve. The affordability of rental units is a tailwind, and I believe the gap between the cost of renting an apartment and buying a home will plateau and perhaps even narrow slightly in the coming year. But that gap is still extraordinarily wide. Wages have risen faster than rents over the past three years. And even as home prices adjust unevenly across markets, owning remains far more expensive, supporting strong rental demand.
5: Multifamily investment activity will rebound as investors regain conviction in improving fundamentals.
I believe 2026 will be a turning point: I expect deal volume to pick up as prices adjust and once-cautious investors develop a taste for risk and potential rewards. But underwriting remains tight, and managers must remain disciplined. I’ve said elsewhere that I believe multifamily real estate has gone through a recession. As we emerge, I believe the 2026 development vintage, delivering in 2029, will reward well-capitalized, organized managers—and investors—who move early in the next upcycle rather than waiting for the crowd.
6: Developers starting projects at the beginning of this upcycle will be best positioned for success.
It’s still a challenge to get new projects started. But for developers with vision and deals that pencil, this moment offers opportunity. Supply is declining, demand is robust and rent growth is projected to accelerate into 2026 and beyond. And new construction starts of rental housing developments are down 70% from their peak. At Origin, we believe that projects started now will deliver into a stronger rent environment several years out. The 2026 development landscape is defined by scarcity and selectivity. Developers who start now stand to deliver into what we see as one of the most favorable rent-growth windows of the decade.
7: Multifamily construction costs will remain flat over 2025.
I believe multifamily construction pricing will remain flat in 2026 based on signals from national trends and direct contractor feedback. While tariffs remain a wild card, they haven’t yet materially increased pricing due to weak demand. According to Origin’s construction leaders, the industry is experiencing one of the lowest levels of multifamily starts since 2013. This lack of new development has translated into slower pipelines for general contractors and subcontractors, pushing them to compress margins and offer buy-savings during procurement.
8: Controllable multifamily operating expenses will stabilize as new supply fades and expenses flatten.
I see 2026 as a year of moderating payroll and materials costs, and on-site headcount will generally remain flat. Insurance costs that skyrocketed in recent years will increase in the 0 to 2% range. On the revenue side, as new projects lease up, concessions will taper, and occupancy should mostly hold firm. But with short-term rent growth elusive, operators will scrutinize every line item, scaling vendor pricing and maximizing tech-enabled efficiencies, setting the stage to capture more upside in 2027.
9: Credit spreads will widen as markets reprice risk, creating opportunities for private lenders.
I expect credit spreads to widen moderately in 2026, accelerating in the second half. The beginning of the institutional demand shift toward equity investments and lower benchmark rates will prompt lenders to seek higher yield premiums, creating a more favorable environment for disciplined private credit managers. It’s a year of recalibration—but spreads remain near the tightest levels we’ve seen in decades. The wild cards here are if banks continue their “extend and pretend” behavior, trapping recapitalization opportunities on balance sheets, or unexpectedly high investor demand. Demand for private credit is likely at or nearing its peak. But for Origin, credit dislocation equals opportunity. It represents better entry points, higher yields and stronger covenants that help reduce risk—along with fewer competitors, improved relative value, and wider margins on high-quality loans.
10: Multifamily capital and deal flow will continue consolidating toward larger, well-capitalized managers.
The multifamily sector will continue to consolidate as smaller and mid-sized firms struggle to raise equity or secure financing in a persistently tight capital environment. The top five alternative-investment managers together had raised more than $60 billion by August 2025, according to Stanger Market Pulse. That’s about 54% of all industry inflows. I expect this consolidation to directly shape deal activity in 2026. With fundamentals strengthening, the best-positioned firms will be those that have retained talent, preserved lender relationships, and protected their operating engines through the slowdown. Large platforms will move quickly, deploy capital confidently, and execute multiple strategies at a time when flexibility is an advantage. Disciplined managers that can source, finance and operate through cycles will be winners.
11: QOZ investors will wait on the sidelines until 2027.
I expect Qualified Opportunity Zone investment activity to remain muted as many investors delay commitments until they can capture the January 2027 step-up benefit tied to the five-year deferral period. But this wait-and-see approach may be a mistake: Future updates to QOZ maps will introduce stricter eligibility criteria, including a 70% area median income threshold, that could shift designations into weaker markets where deals no longer pencil without subsidies such as tax-increment financing districts. At Origin, we don’t think a QOZ designation alone makes a project viable; it only alters the tax treatment of gains. Investing before the maps are redrawn may prove advantageous for strategic developers.
Note: If you’d like to see my multifamily predictions for years past, find them here: 2025, 2024, 2023, 2022, 2021, 2020 and 2019.
