The tone at this year’s Best Ever Conference in Salt Lake City was noticeably different.
Attendance was lower than in prior years when rooms were filled wall to wall. Many operators and investors have stepped to the sidelines. Some by choice. Some forced by capital constraints.
At the same time, a greater number of well-capitalized players were also present compared to last year.
That shift matters.
When broad enthusiasm fades and weaker hands exit the market, cycles often move closer to opportunity. The question is not whether commercial real estate and multifamily are under pressure (there is no doubt that they are currently). The question is where we are in the cycle and what that signals for 2026.
Below I want to share the five signals that stood out to me.
1. The Market Has Accepted “Higher for Longer”
There is growing acceptance that interest rates are unlikely to decline meaningfully in the near term.
While the Federal Funds Rate may move modestly, five-, seven-, and ten-year Treasury yields do not appear positioned for a sharp drop (I discussed this in more detail in a recent article). That matters because multifamily pricing is not based on hope. It is based on math.
One slide captured the formula clearly:
Multifamily Value = NOI / Cap Rate
On the NOI side, operators are facing:
- Wage growth pressure (partly due to recent immigration policies)
- Expense inflation (e.g. insurance and other admin expenses)
- Higher maintenance and materials costs and rising capex (due to tariffs and higher labor costs)
- ICE raids impacting occupancy (particularly in Class C properties)
- Flat to declining rents and higher concessions and delinquency
On the cap rate side:
- Elevated interest rates
- Lower transaction volume
- Rising foreclosure activity
- Global political uncertainty
- Working through the 2022-2024 supply overhang
John Chang and J Scott walked through the macro sequence that led us here: strong GDP and job growth, inflation acceleration, aggressive rate hikes in 2022, and then a sharp reset in multifamily values.
Multifamily values declined meaningfully (in some cases -30%) from peak levels. That repricing is real. And it is not yet fully resolved.
Cap rates have only peaked four times in the past 36 years. We are in one of those periods.
Many 2021 and 2022 floating-rate bridge loan deals will not be rescued by lower rates. The “extend and pretend” phase is nearing its end.
2. Distress Is Moving From Theory to Execution
Portfolios are entering special servicing. Banks are forcing sales. Short sales are reappearing, where property values are below outstanding loan balances and lender approval is required.
We have not seen this dynamic in more than a decade.
In many ways, 2022 marked the beginning of this cycle’s stress, when rates spiked rapidly. We are now in years three and four since that shock. Historically, this is when distressed opportunities begin to surface more consistently.
This feels similar to 2012–2015, when assets gradually worked through the system several years after the financial crisis.
There is substantial capital waiting to be deployed, particularly for strong Class A and B properties. But it is disciplined capital. Underwriting assumptions are conservative. Break-even occupancy matters again. Debt structures matter again.
Class C properties have been hit the hardest. Macroeconomic strain, affordability pressure, and localized policy dynamics are creating stress at the tenant level. Meanwhile, stronger Class A and B properties remain more stable, though not immune.
Recovery will be uneven and highly market-specific. National averages are increasingly misleading. Market selection and submarket analysis matter more than ever.
3. Supply Is Peaking, But Demand Is Selective
Supply overhang remains a concern in several markets. However, projections suggest deliveries could normalize over the next 12 months if new construction slows and absorption continues.
Demand is positive, but not as strong as in prior cycles. Macroeconomic and geopolitical headwinds are real. Concessions spiked in many markets. Rent growth reset.
At the same time, homeownership affordability remains stretched. That continues to support rental demand at a structural level.
The takeaway is clear: stable value-add strategies are under pressure. Operational excellence is now the primary driver of returns.
In this environment, profits are more likely to come from:
- Tight expense control
- Strong property management systems
- Realistic rent growth assumptions
- Conservative leverage
- Market selection discipline
The era of easy appreciation is over. The era of execution has returned.
4. Governance and Due Diligence Are No Longer Optional
A sobering reminder from the conference was that fraud does not always start on Day 1 .
Red flags for operators include:
- Missing disclosures
- Copy-and-paste PPM language
- Inadequate due diligence
- Poor reporting
- Commingling of funds
For investors, the message was direct:
- Conduct independent background checks
- Confirm assets exist through title reports
- Verify revenue sources
- Request financial statements directly from CPA firms
In stressed cycles, weak governance is exposed. Transparency is not a marketing feature. It is a survival requirement.
5. Strategy and Self-Leadership Will Define the Winners
Beyond the numbers, one presentation resonated because it addressed the human side of the cycle.
Coach T summarized it simply:
- What am I focused on?
- What meaning am I giving it?
- What am I going to do moving forward?
Another slide emphasized that what got you here will not get you there .
That applies directly to multifamily investing in 2026.
If your strategy was built on aggressive leverage, short-term appreciation, and optimistic refinance assumptions, this cycle is exposing those weaknesses.
If your strategy is built on conservative underwriting, liquidity, strong systems, and disciplined market selection, this cycle may present opportunity.
This does not feel like collapse.
It feels like sorting.
Weak capital structures are being tested. Strong balance sheets are preparing to expand.
What This Signals for Multifamily in 2026
We are likely entering the phase of the cycle where:
- Short sales and foreclosures increase
- Special servicing rises
- Bank-owned properties surface
- Forced sales create price discovery
At the same time:
- Institutional and private capital remain active for high-quality assets
- Supply begins to normalize
- Operators who focus on systems and execution gain ground
Historically, some of the best buying windows do not open during panic. They open during fatigue, when broader interest fades and disciplined buyers remain.
The Best Ever Conference did not signal euphoria.
It signaled realism.
And in real estate cycles, realism is often the early stage of opportunity.
Download The Busy Professional’s Quick Guide To Investing In Multifamily here.
Disclaimer: The information presented does not constitute legal, accounting, tax, or individually tailored investment advice. Past results do not represent or guarantee future performance.