Housing isn’t making anyone happy these days. 

In a survey of more than 100 principals and executives across private real estate investment firms, Berkadia found that 61 percent of respondents characterized their outlook for the multifamily market in the second half of 2026 as negative due to capital markets volatility, Commercial Observer can first report. 

Meanwhile, 52 percent said that the asset class performed worse in the first half of the year than they had anticipated.  

“Six months ago, investors were very optimistic that [volatility] was going to fade and transaction activity was going to accelerate,” said Josh Bodin, senior vice president of capital markets strategy and trading at Berkadia, in a conversation with CO. 

“Instead, the operating environment has remained a lot more uncertain, interest rate volatility has persisted and property performance has stayed softer than expected,” he added. 

Bond yields have been high for most of 2026. The 10-Year Treasury currently sits at 4.7 percent, its highest levels since 2023, while the 30-Year Treasury sits at 5.2 percent, a 20-year high.  

In a separate report, CBRE found that first-quarter investment sales in multifamily hit $29.5 billion, a 6 percent decline year-over-year, while the second quarter saw a rebound of investment sales activity to $34.9 billion (that total was still down by 2.7 percent year-over-year).

However, Bodin emphasized these metrics and investors’ sentiments haven’t translated into a loss of confidence in multifamily as an asset class, but has instead changed how investors view execution risk. 

To this end, Berkadia’s survey found that 82 percent of investors plan to expand their portfolios in the coming months and that 83 percent expect market conditions to improve by late 2027. 

“On the tailwinds side, near-term, supply deliveries are beginning to moderate in many markets, capital remains really available for well-positioned assets and investors increasingly expect conditions to improve,” said Bodin. 

Moreover, Berkadia’s survey revealed that nearly 50 percent of responses are underwriting exit cap rate expansion of 25-to-50 basis points, while nearly 75 percent now assume rents will grow no more than 2.5 percent between now and late 2027. 

“Investors are scrutinizing rent growth assumptions, exit cap rates, financing structures and their business plan more closely than they were earlier in the year,” said Bodin. “Investors want stronger fundamentals, more realistic pricing and more downside protection before deploying capital.” 

“Investors are bullish on multifamily, they’re just cautious on individual deals right now,” he added, emphasizing that investors are prioritizing core and core-place credit and debt strategies over value-add and opportunistic deals.  

If there is one area of the country that has secured investor confidence, that would be the Midwest. 

Berkadia’s survey found that 58 percent of investors and executives prefer the Midwest to the Southeast and Mid-Atlantic, which received support from 52 percent and 46 percent of respondents, respectively. 

“Broadly speaking, the Midwest showed 4.6 percent year-over-year rental growth assumption and in the Northeast you saw a low 3.2 percent,” said Bodin. “It shows the Midwest is a capital destination for 100 of our clients we surveyed … they’re seeking that durable cash flow aspect.” 

Brian Pascus can be reached at bpascus@commericalosberver.com