Smaller Deposits, Weaker Renters, and the Risk Building in Multifamily Portfolios

The multifamily market has spent the better part of two years absorbing the largest wave of new supply since the 1980s, and the numbers have finally caught up with the narrative. National vacancy has climbed to 8.6%, the highest level in years, while asking rent growth has flattened to roughly 0.2% annually. Absorption through the first five months of 2026 fell 61% year over year, with just 108,000 units absorbed. Occupancy has slipped to 94.1%, down 60 basis points from a year earlier, and among the top 30 markets tracked by Yardi, only San Francisco posted an occupancy gain.

“The second quarter this year was the big pivot everyone has been waiting for,” said Greg Willett, Chief Economist at LeaseLock. “We are starting to see price corrections, particularly for the bottom part of the market.” That correction has not translated into transaction volume, though, because the financing environment has not settled enough for buyers and sellers to agree on value. “The wildcard has been interest rates,” Willett said. “It has created some price correction but they haven’t stabilized in order to see better deals come to the market.” The result is a market where owners who might otherwise sell are holding assets, which puts more weight on operating performance to carry returns that would previously have come from a sale...

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RSK: Concessions are prevalent. Yet, Madison keeps approving more apartment units. Are the warranted? We shall see. We are a fast growing community.