Sentiment Shifts at NMHC 2026: RCLCO’s Key Takeaways

By Rick Pollack, Managing Director, RCLCO Fund Advisors; Scot Bommarito, Vice President, Research, RCLCO Fund Advisors; Eric Willett, Managing Director, RCLCO; Amanda Miller, Senior Associate, RCLCO Fund Advisors; Scott Haley, Vice President, RCLCO Fund Advisors; Carter Smith, Vice President, RCLCO Fund Advisors

The RCLCO and RCLCO Fund Advisors teams returned last week from the National Multifamily Housing Council (NMHC) Annual Meeting. Despite the winter weather disrupting travel for many, industry participants were excited regroup and strategize about where to head after “Survive ‘Til ‘25”. Overall sentiment was improved from last year, and attendees were encouraged by the openness of the debt markets and signaled improvements in the equity markets. Still, market participants acknowledged that supply pressure will continue to weigh on market performance for at least another year, with conversations focused on how and when to prepare for the other side of the supply glut. Here are some of the common themes from the week:

Multifamily debt was readily available throughout 2025, particularly the latter half of the year. The Agencies continue to be competitive relative to other lenders and underwriting is beginning to show more loan originations being capped at LTV’s rather than DSCR restraints.

Despite the drop in values since interest rates began increasing in 2022, the multifamily market has not seen a lot of distress (e.g. banks taking back assets), at least not that most owners and sellers are willing to admit. But with maturity dates looming, owners are increasingly finding their lenders—particularly banks, which have improved their balance sheets and prefer to recycle capital into new loans—unwilling to extend. Those that cannot extend, and even some that can, are facing the reality of needing to contribute additional equity to rebalance or refinance. This has created opportunities for providers of gap financing such as preferred equity and mezzanine debt. It has also resulted in more sellers running out of time or options being forced to sell assets for values likely close to the loan balance, which we expect to accelerate in 2026.

While debt capital markets have opened, development capital remains selective and LPs expect yields in the mid- to high-6% range. The theme of 2025 starts were submarkets with limited supply and/or the product of developers finding creative ways to maximize economics to meet investor return requirements. LPs’ skepticism of near-term rent growth represents a continued headwind for 2026 starts but moderating pipelines, the recent stabilization in valuations, and expectations of more stable fundamentals through year end give developers hope that capital flows will increase in 2027.

Older product, which most investors were defining as being built before 2000, was not a frequent topic of conversation at this year’s conference. With record supply weighing on Class B and C rents—which is likely to persist as the market absorbs the supply overhang—attendees seemed more cautious about their ability to achieve attractive ROIs on unit renovations in older assets. The Sunbelt markets, in particular, are seeing little equity investor interest as current yields present difficult paths amid softening rents and shrinking renovation premiums. Though debt markets remain liquid for this product type, higher interest rates have reduced the ability to rely on financial engineering to drive returns. Older value-add assets, particularly of 1970’s and 80’s vintage, will likely face increasing challenges in the coming years as institutional investor appetite continues to wane.

The fundraising environment remains difficult – with success largely focused in the larger and diversified funds that offer allocation to other ends of the risk spectrum and/or other asset classes. Alternatively, market participants indicated strong equity allocation gains in the core / core+ space, likely well beyond the expected volume of product coming to market in 2026. This dynamic is expected to create competitive bidding processes and keep yields tight in 2026.

There remains enthusiasm for low-density housing (i.e. single-family rental and build-to-rent) and more market participants are attending the conference each year. The dominant topic this year was the recent “Stopping Wall Street From Competing With Main Street Homebuyers” Executive Order. While build-to-rent is not the primary target today, there is broad concern across the sector about regulation at both the Federal and state levels. The industry is engaged and working to get out the message that single-family rentals expand housing choices, but some investors are in wait-and-see mode until there is more clarity.

Investors remain focused on markets with favorable supply dynamics. In cities benefiting from return-to-office trends, renewed leasing activity is attracting investors back to supply-constrained urban and suburban cores. By contrast, the Sunbelt markets, excluding Dallas, remain challenged for 2026 as absorption continues to lag amid elevated vacancy and recent deliveries. The Northeast and West Coast are expected to see continued interest, with New York City as a notable outlier Interest in San Francisco has rebounded, driven by the AI boom, income growth that continues to outpace rent levels, and the continued optimism with actions to address citizens’ post-COVID safety concerns.

For a number of reasons—debt maturities, LPs wanting liquidity, GPs wanting to extend fee streams, GPs looking to entice new capital—owners are increasingly seeking to recapitalize assets. Successful executions, which maybe happens half of the time, seem to benefit from three conditions: 1) the new capital believes in the future performance and/or business plan of the assets, whether that’s renovation, stabilization, or something else; 2) the new capital feels it is buying in at an attractive basis, with bigger discounts necessary to raise follow-on capital (which can be difficult for existing LPs to accept); and 3) GPs are willing to put new capital into their assets, demonstrating their belief and alignment. Sponsors are also increasingly exploring platform recapitalization to support next-cycle growth plans, sustain the platform in the face of limited transaction volume, and execute ownership transitions. While there have been few, though notable, transactions so far, all signs point to greater activity in this arena in 2026.

Institutional capital focused on stabilized assets is expected to re-enter the market in 2026, supported by a significant accumulation of dry powder over recent years. Private capital, including family offices and high-net-worth buyers were the most active in 2025 and are expected to retain a competitive advantage at least in the first half of 2026. Most acquisition strategies are focused on newer vintage assets at discounts to replacement cost. New equity raises are required to pursue these strategies for the traditional value-add funds, providing private capital and diversified funds the ability to enter the market earlier.

With golden handcuffs looking more like bronze today, there was increasing chatter about an impending wave of senior-level turnover. Hiring volume has mirrored the transaction landscape, but well-capitalized groups are putting feelers out as they explore hires to drive next-cycle growth.