Navigating the Market: Discipline in a Cycle That Punishes Guessing
By Garrett Williams, MSF · Founder & Managing Partner, PTP Partners — April 29, 2026
Welcome to the first edition of The Basis. I started this newsletter to cut through the noise in multifamily real estate and share what the data actually says. Each edition will track the metrics that matter: cap rates, delinquencies, financing costs, and where deals are breaking, alongside the frameworks I use to underwrite in a market that’s becoming less forgiving by the quarter. Whether you’re an investor, an operator, or someone building in this space, the goal is to give you a sharper lens on what’s happening and why it matters for your capital.
Apartment transaction volume ticked up just 1% in Q1 compared to last year, effectively flat. After years of compressed pricing and aggressive bidding, the market is in a holding pattern. Buyers and sellers remain far apart on expectations, and until that gap closes, volume will stay muted. This isn’t necessarily a bad thing for disciplined operators. When fewer deals are trading, there’s less pressure to move fast, which means buyers can be more thorough in their due diligence. That environment rewards patience and careful underwriting over speed.
Cap rates rose to 5.8% across the multifamily sector in Q1, with mid-rise and high-rise assets both coming in at 5.6%, while garden-style assets came in slightly higher at 5.9%. On the surface, higher cap rates sound like better entry pricing. But the reason they’re rising matters. The 10-year Treasury has increased 30 to 40 basis points in recent months, and as Anthony Palone of JP Morgan noted, that kind of move adds risk to the sector by tightening the spread between what assets yield and what debt costs. When financing costs rise alongside cap rates, the margin for error while underwriting shrinks.
Perhaps the most telling signal from Q1 is where the stress is showing up. Multifamily delinquencies jumped 30 basis points, but the nature of those defaults is what stands out. According to Stephen Buschbom at Trepp, most are term defaults, driven by property-level fundamentals, not loans coming due. That’s unusual. Historically, distress in commercial real estate is triggered by capital markets friction: a loan maturing into a bad refinancing environment. When defaults instead come from occupancy pressure, operating cost inflation, softening demand, or the expiration of tax abatements, it points to deals that were simply underwritten too aggressively at the property level.
“Most of the defaults we’ve seen are due to property-level fundamentals and poor underwriting, rather than loans coming due.” — Stephen Buschbom, Trepp
The takeaway heading into the rest of 2026 is straightforward: operational efficiency is no longer optional. With rent growth stalling and term defaults on the rise, the investors who protect capital will be the ones who stress-tested their assumptions: on expenses, on occupancy, on debt service, before they closed, not after. Disciplined underwriting isn’t a conservative approach in this market. It’s the only approach that makes sense.