Multifamily’s Reset Heading into 2026 — Capital Structure, Runway, and What Survives

📖 About This Summary

This article summarizes Old Capital Real Estate Investing Podcast – Episode 338, “From 2025 to 2026: Capital Markets, Multifamily Trends, and Expert Predictions,” featuring Paul Peebles and James Zang. The discussion provides a grounded, lender-level view of the U.S. multifamily market as it transitions out of the post-COVID boom and into a longer normalization phase. The focus is not on timing the bottom, but on capital structure, deal survivability, and where risk is actually being transferred in the market. All content is edited and annotated by Time Health Capital.

“You don’t need perfect timing. You need time.”

🧭 The Big Picture: “Survive to ’25” Was Real

A phrase that circulated quietly through the industry — “Survive to ’25” — turned out to be accurate.

• Foreclosures increased versus 2024.
• Lenders began taking deals back rather than extending indefinitely.
• Capital exhaustion, not rates alone, forced exits.

This wasn’t a collapse — it was a sorting mechanism. Over-levered, under-capitalized deals that relied on quick refis or cap-rate compression simply ran out of runway.

🏦 Why Multifamily Still Has a Financing Advantage

Compared to other commercial real estate sectors, multifamily retains a structural edge because of the agency channel.

• Non-recourse debt
• 30-year amortization
• Long interest-only periods
• Lower fixed rates than banks or CMBS

The episode notes that both agencies likely hit their 2025 caps, and that 2026 caps expand further (adding additional lending capacity).

🏢 What’s Trading — and What Isn’t

Transaction volume in 2025 skewed heavily toward Class A assets — newer properties, better amenities, easier underwriting, and stronger institutional demand.

• Newer properties (2000s and newer)
• Better layouts and tenant profiles
• Easier underwriting for agencies and institutions

Meanwhile, many B and C deals stalled as cap rates expanded and sellers couldn’t meet market pricing reality — some never traded, others failed after going under contract due to equity shortfalls.

🧮 Rates Aren’t the Real Problem

The discussion makes a key distinction: short-term Fed cuts matter mainly for floating debt; long-term Treasury yields matter far more for acquisitions.

• 5–6% long-term fixed agency debt is historically normal.
• Refinancing surged when rates briefly dipped below 5%.
• Rate stability — not rate collapse — is what unlocks transactions.

⚠️ The Real Damage Was Done by Bridge Loans

The pain in this cycle didn’t come from agency debt. It came from short-term bridge loans and floating-rate exposure.

• Floating-rate exposure
• Underestimated capex and interest-carry
• Assumptions of fast exits

Borrowers who locked long-term fixed agency debt in 2018–2019 may have hated prepayment penalties — but they survived without capital calls. Those who chased flexibility paid for it later.

🧱 What Actually Works Right Now

James Zang’s positioning is conservative and instructive:

• Focus on A and strong B assets
• 200+ units for economies of scale
• Deals that qualify for agency debt on Day 1
• Five- to seven-year minimum hold periods
• Operators with proven leasing and operational depth

Broken deals at a better basis can work — but only with excess capital and patience.

⏳ The Real Test Is Runway

This downturn is longer than most expected. Deals fail not because they’re bad — but because they didn’t raise enough equity, underestimated stabilization time, or assumed the market would save them.

You don’t need perfect timing. You need time.

🏘️ Supply vs. Demand: The Concession Problem

Yes, housing shortages exist nationally — but supply is unevenly distributed, with new deliveries concentrated in pockets and concessions staying widespread.

• Concessions (8–12 weeks free rent) remain common.
• Tenants lead negotiations with one question: “How much free rent?”
• This pressures B/C operators and delays rent normalization.
• Burn-off is happening — just slower than expected.

💡 Our Commentary / What It Means for Us

At Time Health Capital, we view this discussion as confirmation of a broader theme across markets: cheap capital masked weak structure, and discipline is being rewarded again.

• Survivability matters more than speed.
• Long-duration assets require long-duration thinking.
• This is not a moment for aggressive leverage or hero underwriting.
• Conservative assumptions, strong operators, durable capital stacks, and willingness to hold longer matter most.

The winners of 2026 will be the ones who didn’t need rescuing in 2024–2025.

❓ Questions & Implications for Readers

• Does your deal survive without refinancing for three years?
• Are concessions built realistically into your projections?
• Is your capital stack designed for stress — or optimism?
• Do you have patience, or just confidence?

These questions are pulled directly from the episode summary.

🎥 Prefer to Watch the Full Discussion?

Watch the original Old Capital Podcast episode here:

EPS 338 — From 2025 to 2026: Capital Markets, Multifamily Trends, and Expert Predictions