As we prepare to step into a new year, both multifamily and senior housing remain strong asset classes despite any headwinds they face. The fortitude of these housing categories is a result of them being a necessity and the demand for units. As homeownership costs remain elevated, pricing many people out of the market in certain areas of the country, we see people choosing to remain in rental units. Likewise, the country’s Baby Boomer population is driving record demand for units within all core senior housing subcategories, and the industry is looking for ways to meet that demand along with the unique needs of this generation.
LIKE THIS CONTENT? Subscribe to MHN’s Finance & Investment Newsletter
A look at apartments
This year did bring some challenges to multifamily owners. Rents softened following the well-documented record surge in new unit supply, interest rates remained elevated in response to inflation and other factors, and transaction volume lagged overall. However, deal upticks occurred, with much of the refinance activity focused around the Federal Reserve’s two 25-basis-point interest rate cuts in September and October. The Federal Reserve also announced another 25-bps cut on Dec. 10.
One of the biggest stories of the year was the 43-day government shutdown that began Oct. 1. The longest in U.S. history, it impacted the apartment sector in a variety of ways. In addition to the general economic uncertainty it brought, it caused delays in federal financing, suspended permits for new-construction projects and caused cash flow issues to some owners reliant on federal subsidies. Fannie Mae and Freddie Mac, which together comprise the largest lending source for apartment owners, notably avoided direct impacts to their multifamily loan activity because they are primarily self-funded. HUD lending continued during the shutdown for firm commitments. However, the agencies stopped taking new applications during that period. Unsurprisingly, this resulted in some delayed deal flow, even though regular operations have since resumed.
In early November, the Mortgage Bankers Association noted that multifamily loan originations increased 12 percent from the prior quarter and had grown 27 percent year-over-year. GSE lending volume increased 37 percent from the prior quarter and 40 percent year-over-year. These numbers reflect the key role the GSEs play in financing the apartment sector, along with more significant deal flow in the conventional loan space, where experienced sponsors can source any gaps in the capital stack.
Loans for affordable housing communities have also been on the rise. This is an important note considering the country continues to face an affordable housing crisis. The U.S. currently lacks 7.1 million homes to meet demand among renters with extremely low incomes (i.e., at or below the federal poverty guideline or 30 percent of area median income, whichever is greater), according to the Low Income Housing Coalition. This issue will require new supply and the preservation of existing units—both of which require available financing. With the issue now at the forefront, there are some positive inroads being made at the federal, state and regional levels to incentivize solutions.
In late November, the Federal Housing Finance Agency announced the 2026 multifamily lending caps for Fannie Mae and Freddie Mac. Each agency was allocated $88 billion, for a $176 billion combined total, a notable 20 percent increase from the 2025 caps of $73 billion for each GSE (or $146 billion total)—targets that are likely to be reached. As with 2025, next year’s caps are designed to keep the focus on addressing affordable housing and underserved market needs; 50 percent or more of the lending activity must be attributed to mission-driven affordable housing (workforce housing loans will be omitted from the limits). Of course, the industry is also watching news for developments on a possible IPO for Fannie Mae and Freddie Mac and how that might impact their direction moving forward, should it occur.
Initiatives within HUD will also make it a more competitive lending option. Effective Oct. 1, HUD reduced its Mortgage Insurance Premium, or MIP, to a uniform 0.25 percent for all Federal Housing Administration multifamily insurance programs. This will simplify costs to developers and will hopefully expand rental unit supply. HUD has also made build-for-rent properties eligible for its program financing.
Senior housing trends
Senior housing continues to perform with overall positive metrics. Occupancies have grown for 17 consecutive quarters. According to NIC MAP, third-quarter senior housing occupancy increased 70 bps from the prior quarter to 88 percent. Positive occupancy movement reflects the Baby Boomer cohort now moving into senior facilities at an increased rate as their housing needs shift and their care needs increase. A lack of new-construction supply has also helped drive occupancies up, but it’s an area the industry will need to address.
One visible trend is occurring in senior living facilities. Many senior communities have been shifting from offering just one level of acuity care to providing many. Not only does this continuum of care allow more seniors to age in place but it allows operators to retain clientele longer.
The senior housing sector will need to continue to seek out ways to better meet the needs of the Baby Boomer generation. There appears to be an appetite among some operators to expand, and 2026 may bring some additional M&A activity as we see these efforts in action.
Some of 2025’s challenges are expected to carry over into 2026. Both housing sectors will need to address strong demand, both will be impacted by any ongoing economic uncertainty, and both will need to address AI-driven opportunities and challenges. The lenders serving apartment owners and senior living operators will also feel these impacts and will be watching any changes that may arise with the GSEs and HUD, as well as any potential banking regulation changes.
Troy Marek is managing director & group head of real estate capital markets project finance for Regions Bank.
This information is general education or marketing in nature and is not intended to be accounting, legal, tax, investment or financial advice. Although Regions believes this information to be accurate as of the date written, it cannot ensure that it will remain up-to-date. Statements of individuals are their own—not Regions’.
The post What’s Next for the Capital Markets? appeared first on Multi-Housing News.
Gillian Executive Search is a leader in Affordable Housing Development, Financing, Design and Construction recruiting. www.gessearch.com