Every multifamily budget is built on a series of assumptions.
→ How much can you realistically push rents?
→ Will concessions finally ease?
→ Has new supply peaked?
→ Which expenses will keep climbing?
→ Will the market give you any more breathing room than it did this year?
Those are big questions to put numbers against when the multifamily market’s still sending plenty of mixed signals.
During WithMe’s recent budget season briefing webinar, multifamily economist Brad Dillman, founder and principal of Florey Street Advisors, broke down the economic and market forces behind those signals, where he sees conditions heading next, and what property teams should be paying particularly close attention to this budget season.
While there are signs of improvement in certain markets, Brad's outlook comes with an important reality check → 2027 probably isn't the year to build your budget around a dramatic rebound.
Instead, the message for property teams was much more measured → sharpen your budgets, know where you can continue to cut, and pay close attention to what's happening in your individual market.
Here's why.
The supply story isn't over yet.
For the past few years, multifamily has been waiting for the wave of new supply to taper off and give demand more room to catch up. But we're not there quite yet. To understand why, it helps to go back to several conditions that took shape during the pandemic.
Eviction moratoria and stimulus helped drive occupancy and rents higher, while historically low interest rates encouraged new development. Then, as that supply started hitting the market, immigration between 2022 and 2024 helped create additional housing demand.
So much has changed since then. But the supply that was set in motion hasn't disappeared, and institutional multifamily development only tells part of the story.
Housing starts in buildings with five or more units have remained elevated, and current models now push peak housing oversupply across housing types out to 2029. That's a much longer runway than the "supply cliff" the industry has been waiting for.
For teams building 2027 budgets, it means assumptions about stronger rents, fewer concessions, or easier leasing shouldn't hinge on competition suddenly disappearing next year.
Rent growth may improve, but expectations should be grounded.
National rent growth is expected to remain negative in inflation-adjusted terms over the next several years. That doesn't necessarily mean rents themselves will fall. It means that even where rents grow, those increases may still trail inflation.
For renters, the past few years have already brought some relief. Rent-to-income ratios have fallen below pre-pandemic levels in some markets and, in certain areas, reached lows not seen in a decade. For operators, the same environment puts more pressure on realistic revenue assumptions.
Crystal Moya, vice president of operations at Luma Residential, said her team isn't budgeting for a significant rebound. Her expectation is more modest rent growth, somewhere in the 1% to 2.5% range for the markets she oversees.
And there's a real risk to assuming much more than the market can support.
Lindsay Duffy, vice president of operations for the Southwest Division at Asset Living, has seen aggressive rent pushes quickly take a toll on occupancy, especially in markets where heavy concessions are still part of the competitive landscape.
If the market won't support the number in your budget, eventually the market wins.
There’s no single multifamily outlook.
A national forecast can tell you where the broader market is heading, but it can't tell you what's going to happen at your property.
Metro- and submarket-level differences are becoming increasingly important, and the regional forecasts shared during the webinar show just how varied the picture already is.
→ The West Coast and Northeast currently come out strongest in the regional forecasts.
→ Parts of the Midwest that have performed relatively well in recent years may be losing some momentum.
→ The Sunbelt is becoming more nuanced after several years of significant pressure, with more separation beginning to emerge between individual markets and submarkets.
The bigger takeaway isn't necessarily which region lands where. It's how quickly the outlook changes once you move from the national picture to individual metros and submarkets.
As Crystal Moya astutely noted,
“If you don't know what's going on around you, start digging in.”
National and regional forecasts can give you context, but before those assumptions make their way into your budget, get specific about what's happening in your own market and submarket.
This is still an operations market.
When rent growth is limited, supply remains competitive, and concessions are still part of the equation, properties have less room to rely on favorable market conditions to make up the difference.
How you operate matters more.
That starts with understanding exactly what happened at your property throughout the year.
Tiffany Reynolds, director of property management at RangeWater Residential, notes her team's 2027 budgeting process will begin with one question…
What happened in 2026?
Before making any assumptions, her teams have to be able to fully explain this one.
| → Where did performance land? | → What drove it? |
| → Where did the property miss expectations? | → Where did it outperform? |
Then comes the business plan.
| → Is the property preparing for a sale or refinance? | → Is ownership considering a value-add strategy? |
| → How should those plans influence the decisions being made today? | |
Those answers should shape the budget just as much as any national forecast.
Two properties can operate in the same economic environment and still need very different plans for the year ahead.
Don't underestimate the value of retention.
When rent growth is modest and competing communities are still offering concessions, holding onto the residents who are already in your building can have a meaningful impact on both sides of the budget.
For Tiffany’s teams, highly personalized experiences have made the most meaningful impact on retention. Some are about making residents feel seen and understood:
| → Welcome kits featuring move-in necessities (cleaning supplies, toiletries, water) | → Handwritten cards and notes |
| → Thoughtful birthday gifts | → Move-in anniversary treats |
Others are about helping residents to form lasting relationships:
| → Dog-walking groups | → Book clubs |
| → Play dates | → Niche educational and experiential classes |
When residents truly feel appreciated, and they have ample opportunity to form real connections with the people around them, it gives them another reason to stay when a competing community comes along with an attractive concession.
There's a financial benefit, too. Every renewal means one less unit you have to pay to turn, one less unit you have to market and one less concession you have to offer.
Keep a close eye on immigration.
There are still several variables that could change the 2027 outlook, from employment data and interest rates to shifts in housing demand. However, immigration is the single most important variable for multifamily teams to watch, especially after its role in supporting housing demand during the recent supply wave. Whether that begins in 2027 or doesn’t become a story until 2029 remains to be seen.
Which brings us back to all those assumptions sitting in your 2027 budget.
Some will be accurate. Some won't. And some will probably need to change before next year is over. What matters is making sure they're grounded in what you know today: how your property actually performed, what's happening in your submarket, what residents are telling you and where you have room to operate more efficiently.
Brad described the possibility of a "glimmer of heaven in '27."
Maybe we'll get it.
