Why Investors Are Feeling Increasingly Positive About the Multifamily Market

Southern Demographics Boosting Investor Confidence

Interest rates, as much of an immediate relief as they are, do not sway markets alone. So, what’s keeping buyer sentiment buoyant? 

For one, those positive sentiment percentages are boosted by a trend-bucking increase in IRR targets for core assets in Sunbelt markets, notably in places like Dallas and Austin—the very locations that have experienced the most dramatic ups and downs in their respective multifamily sectors over the past few years. An unprecedented increase in demand following the much-documented “Sunbelt Surge” resulted in a construction boom, which eventually dampened demand (and rental prices). 

Why, then, despite continued rental growth deceleration and increased construction, are investors feeling positive? Because it now appears that the localized construction booms have not fixed the housing shortage in these—or any other—regions. 

According to JLL, there is a shortage of 3.5 million housing units in the U.S. This, combined with an unprecedentedly high (and rising) cost of homeownership, means that many would-be homeowners will remain renters in 2026. This is causing the uptick in multifamily investor confidence.

Paradoxically, the new multifamily construction that has decelerated rental growth has also made renting a more affordable and therefore attractive option for many people. Rather than buying an overly expensive home with an exorbitant mortgage (interest rates are still high), many renters are expected to renew their leases instead. 

Investors are, correctly, banking not on sharp rental growth, but on steady demand. And current demographic statistics are showing that the South in particular, is experiencing a population boom, with suburban Dallas emerging as the fastest-growing city in 2024. 

Demographics are a long game, but investors cannot ignore the shorter-term moving trends that can unfold over a few short years—as was notably the case with the boom-and-bust fate of Austin during the past five years. Currently, people are moving South more than to other U.S. regions, but we need to be more specific here: Renters are moving not just anywhere in the South, but to attractive job hubs like Miami and Dallas. 

Bidding Activity Also Up

Rising investor confidence is reflected not just in percentages of positive sentiment but also in bidding activity, which is showing an uptick, especially in the multifamily sector, according to JLL’s Global Bid Intensity Index.

“As capital deployment accelerated during the third quarter, institutional investors are signaling increased confidence in the market, even as uncertainty persists,” said Richard Bloxam, CEO of capital markets at JLL, in a press release. “We expect business confidence will continue to improve and pave the way for continued capital flow growth into 2026.”

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