Apartment prices have fallen this year but are stabilizing, according to the recent Trepp Property Price Index. 

In the report, Trepp looked at pricing from two perspectives: an equal-weighted view that balanced representation across property types and price tiers and a value-weighted view that emphasized larger-dollar transactions.

Under the EW analysis, Trepp found that second-quarter multifamily prices fell 2.56% year over year, and fell 3.49% since June 2022. However, they fell only 0.1% from Q1 2026 — before Treasury rates began to really spike.

VW saw a much sharper multiyear drop, with prices in Q2 2026 down 17.8% since June 2022. However, values only declined 3.41% year over year and 0.54% from Q1 to Q2. 

“The results suggest that the sector’s price decline slowed in the second quarter,” Trepp said in the report. “New supply pressure is easing in some markets, and expenses are moderating.”

Despite easing supply pressures, other trends are suppressing multifamily pricing. Capital costs continue to rise, making it harder to buy and refinance. As that’s happening, more loans are maturing and lenders are growing impatient.

Costs of capital rising

While operating fundamentals are improving, they haven't rebounded enough to offset the higher cost of capital since the Federal Reserve started hiking rates in 2022. “Recent increases in the cost of capital add another headwind,” Trepp said.

Indeed, the 10-year Treasury has spiked over the past couple of months, hitting 5.24% on Monday, according to CNBC. That creates a host of problems, according to Ian Symington, vice president and head of acquisitions at Lion Real Estate Group.

“The implications for multifamily are abundant,” Symington said in emailed comments. “Outside of the obvious implications to cash flow and investment activity, if borrowing costs continue to rise, there will be less capital deployed into commercial real estate as it looks for alternative investments less exposed to interest-rate risk.”

Symington called borrowing costs running “higher for longer” more impactful than a single rate hike from the Federal Reserve. “If borrowing costs continue to rise, there will be less capital deployed into commercial real estate as it looks for alternative investments less exposed to interest-rate risk,” he said.

Otto Ozen, executive vice president, The Mogharebi Group, also noted that longer-term Treasury yields drive multifamily pricing, along with the cost and availability of debt. 

“If rates continue to move higher, we would expect upward pressure on cap rates, more conservative underwriting, and continued friction in transaction volume,” Ozen said in emailed comments. “Ultimately, a sustained higher-rate environment will weigh on values and slow transaction velocity.”

Maturities remain a threat

As the cost of capital keeps increasing, the wall of multifamily maturities looms. According to Trepp,  multifamily is just behind office and retail in hard CMBS maturities for October. Multifamily accounts for 51.86% of the “severely impaired balance,” according to the firm.

But CMBS is only one slice of the loan maturities hitting multifamily. The Wall Street Journal recently reported that apartment owners face a $2 trillion maturity wall.

“The billions of loan dollars that were originated in 2021 and 2022 are coming due, and if lenders believe that rates will remain higher with stagnant operations at the property-level, they may decide to rip the bandage off as opposed to extending with current sponsors,” Symington said.

If lenders cut bait, pricing could fall further, as it did after 2008. “I don't think it'll be 2008 level, but there will be washed-out pricing,” Westland Real Estate Group CFO Shimon Greenspan previously told Multifamily Dive.

For investors planning to buy in this environment, Symington said operational resilience, durable cash flow, active asset management and conservative underwriting are paramount. 

“This investment thesis is not new, but it is one that was able to be skirted around during a brief period of extreme rent and income growth, coupled with lower costs of borrowing and historic levels of liquidity in the marketplace,” he said.

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