As the multifamily industry moves through the second half of 2026, the mood is shifting—not to full-blown optimism, but to something more grounded: cautious confidence.
That was the takeaway from a recent episode of Inside the Deal, a CRE Podcast by Berkadia®—Part 1 of a two-part conversation—in which Berkadia’s Executive Vice President of Production, Ernie Katai, sat down with Jay Parsons, one of the industry’s most closely followed rental housing economists, to unpack what is really happening beneath the surface in multifamily. Their conversation cut through the noise on rates, supply, renter demand and capital markets—and offered a clear message for owners, operators and investors alike: the market is improving, even if it still feels difficult day to day.
Parsons described today’s environment in three words: “choppy,” “renter’s market” and “resilient.” That combination may sound contradictory, but it captures the current moment well. Operators are still dealing with elevated concessions, pricing pressure and hard-won leasing traffic. At the same time, demand has held up better than many expected, occupancy is beginning to improve and supply pressures are starting to ease.
One of the most important points Parsons made was that the biggest challenge in multifamily has not been a lack of demand—it has been supply. In his view, that distinction matters. While headlines have often framed recent softness as a renter demand problem, Parsons argued that apartment absorption has actually been surprisingly strong. The issue is that demand has had to absorb a historic wave of new deliveries. As that pipeline begins to moderate, the path toward recovery becomes more visible.
The conversation also pushed back on another common industry narrative: that slower home buying should automatically be a win for apartments. Historically, Parsons noted, the strongest periods for rental housing tend to come when the broader housing market is healthy and homes are selling. More housing activity typically signals stronger household formation, a better economy and stronger demand drivers across the board.
That kind of nuance came up repeatedly throughout the discussion. Parsons pointed to the Sun Belt as one example, noting that migration to those markets did not “evaporate” after the pandemic-era boom—it simply normalized. Likewise, affordability is not a one-size-fits-all story. In market-rate Class A and B housing, affordability can still act as a tailwind. At the lower end of the market, however, it remains a much tougher challenge.
On the operations side, the key metrics for the back half of 2026 are less about broad market headlines and more about property-level execution. Leasing traffic, lead conversion and occupancy improvement matter most. As new lease-ups stabilize and competitive pressure starts to come down, operators who can capture more qualified traffic and convert that demand into signed leases will be in the best position to rebuild pricing power and reduce concessions over time.
That’s also why effective rents remain more telling than asking rents. While headline rent growth has been weak, effective rent trends have shown improvement in recent months. At the same time, concessions remain sticky because renters have become conditioned to expect a deal. In some cases, operators are nudging up asking rents while keeping discounts in place—a sign that the market is healing, but not fully normalized.
In capital markets, Parsons sees a bifurcated landscape. Well-capitalized, long-term investors are still active and willing to pursue high-quality deals in strong submarkets. Meanwhile, more heavily leveraged owners and short-term value-add investors remain under pressure. Distress is real, he said, but it has been more concentrated than many predicted, particularly in what he described as “busted value-add” situations. For top-tier assets, the bid-ask spread may be narrower than some buyers want to believe.
So where does that leave the industry heading into 2027?
If 2026 has felt like “two steps forward, one step back,” he expects January 2027 to bring a more upbeat tone—not because everything will be fixed, but because the direction of travel should be clearer. Supply will be further in the rearview mirror, the second half of 2026 may show stronger momentum and the industry could be entering the next leasing season with more confidence than it has had in years.
For an industry that has spent the last several years fighting through uncertainty, that may be the most important signal of all: not that the market is easy again, but that it is finally starting to make sense.
