Investors hunting for cracks in the multifamily story may need to recalibrate their expectations for 2026. While anxiety over the economy and renter affordability is clearly shaping behavior, LeaseLock Chief Economist Greg Willett sees a market that is bending rather than breaking, with performance likely to improve modestly next year rather than slide into distress.
Freeze‑in‑Place renters, Record Renewals
The defining leasing dynamic heading into 2026 is not weak demand but renters’ reluctance to move. Willett tells GlobeSt.com that resident retention at initial lease expiration has climbed to record levels, a function of both macro uncertainty and a maturing renter cohort that is less inclined to churn. “When you don’t know what comes next, the tendency is to just freeze in place and not do anything,” he says, adding that an older, more stable renter base is reinforcing that pattern.
Operators are leaning hard into that behavior. Willett points out that owners and managers have made retention a central operating priority, emphasizing resident relationships and service as they work to “hold on to everybody” rather than chase every last dollar of rent growth on renewal.
The buy-versus-rent math is also working in their favor; with the premium to own versus rent “higher than it’s ever been,” fewer households are eager to purchase, further supporting renewal strength into 2026.
Occupancy Solid, Rents Muted
Despite ongoing affordability stress, Willett’s performance tracking shows a surprisingly uniform picture across the rent roll. Stabilized occupancy is holding around 94% to 95% across unit types, and move‑in rents are down just under 1% year over year. That consistency across floor plans suggests that, so far, the market has not tipped into classic downturn behavior, where smaller units outperform as households contract.
Crucially, there is no broad evidence yet of renters doubling up into roommate households. Willett notes that in prior recessions, technical downturns reliably led to household consolidation, but today’s pressure manifests differently: many young adults are opting to stay with parents rather than share apartments with peers. That distinction matters for investors because it preserves unit demand across the spectrum even in the face of economic strain.
Concessions as a Pressure Valve
If renewals are the defensive line, concessions are the release valve on the offensive side of the ledger. Willett says the use of concessions remains “pretty substantial,” even as new supply volumes ease, with renters now highly attuned to their ability to negotiate price. The longer a unit sits on the market, the more likely it is to transact at a discount, a dynamic that is extending decision timelines as prospects shop multiple options.
In stabilized assets, Willett characterizes the “typical concession” as at least one month of free rent, sometimes more, often tied to slightly longer lease terms, such as 13 months instead of 12. Lease‑up properties are using even deeper incentives to gain traction. For operators, that means blunt headline rent data can understate the true level of effective rent softness in the near term, even as occupancy remains healthy.
2026: Later‑Year Rent Growth, Not a Reset
Willett’s base case for 2026 is neither a sharp rebound nor a downturn, but a modest improvement built on this foundation of high retention and disciplined occupancy management. His models call for rent growth “right around the 2% mark” for new move‑in leases, compared with essentially flat performance in 2025.
That trajectory assumes continued economic expansion with “slow growth, but not a recession year”; a true macro “bump in the road,” he cautions, would change the story.
The cadence of that growth may look unfamiliar. Traditionally, most rent growth occurs in the first half of the year, with operators becoming more conservative in the back half. Willett expects 2026 to invert that pattern. Because demand in 2025 was so heavily front‑loaded, a large block of leases will roll early in 2026, when operators will still be focused on protecting occupancy, even at the expense of pricing. He anticipates that, later in the year, leasing momentum will surpass 2025 levels, creating room for rent growth to materialize more meaningfully in the second half.
Sun Belt Stabilization and the Consolidation Wildcard
Geographically, Willett sees much of the incremental rent growth in 2026 coming from the same Sun Belt markets that have been under the most supply pressure. After a period of pronounced rent cuts, those metros and the broader Mountain and Desert regions are poised to “do better than they have in the past year”—in some cases, meaning the downturn simply becomes “not as bad” as 2025 rather than flipping to robust growth. At a neighborhood level, however, even a shallower decline can look like meaningful stabilization after several quarters of negative prints.
The wildcard remains whether today’s “freeze in place” psychology gives way to traditional household consolidation if the economy stumbles. Willett stresses that current patterns—high retention, stable occupancy, limited doubling up—assume continued, if modest, economic expansion. “Obviously, the story changes if we hit a real bump in the road for economic performance,” he says. For now, though, he characterizes sentiment as “cautiously optimistic,” with 2026 performance expected to be “a little bit better than what we’ve seen in 2025.”
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.