Elkhorn Capital Partners
An apartment building can remain occupied while its financing becomes difficult to sustain. That tension is central to the current multifamily housing reset. The Mortgage Bankers Association estimates that 13 percent of outstanding mortgage balances backed by multifamily properties will mature in 2026, bringing refinancing decisions into focus for owners and lenders.
Those deadlines arrive in a market where price stabilization has not removed financing risk. In its May 2026 Financial Stability Report, the Federal Reserve found that commercial property prices had further stabilized after significant declines, while vulnerabilities associated with upcoming refinancing remained.
Rental income also faces pressure in parts of the country. Harvard’s Joint Center for Housing Studies reported that asking rents for professionally managed apartments fell 0.6% year over year in the fourth quarter of 2025. Declines in the South and West drove that national result, underscoring the importance of location.
Meanwhile, construction is slowing without disappearing. Harvard shows that 488,000 multifamily units were completed in 2025, down 20% from 2024. It also found that construction starts remained above their pre-pandemic average. Together, these findings suggest that neither a uniform recovery nor an immediate shortage should be assumed.
For Bruce Fraser, managing director of Elkhorn Capital Partners, a real estate private equity firm focused on multifamily properties, these conditions call for closer scrutiny of the assumptions behind each purchase. He views the correction as a test of whether a property’s income and financing can support ownership through a difficult market.
“Timing can get you a discount, but the underwriting is what tells you whether the discount’s enough,” Fraser says. His distinction places the emphasis on underwriting, the process of assessing a property’s income, expenses, debt, and risks before deciding what to pay.
In Fraser’s assessment, some difficulties began when buyers treated inexpensive borrowing as a lasting condition. He points to owners who relied on temporary interest-rate caps, which limit exposure to rising rates, without adequately preparing for their expiration. The broader lesson, in his view, is to evaluate financing over the intended ownership period, including what happens when protections end or loans mature.
Bruce Fraser
Location deserves the same attention. Fraser places particular weight on employment growth, housing affordability, and competing apartment supply. He believes those factors should be considered together. A growing employment base may support rental demand, while substantial nearby development may still limit the rents an owner can achieve.
That approach also makes affordability part of the investment analysis. In his view, expected rents should make sense for the households a property serves. Fraser considers tenants’ ability to afford rent an important part of evaluating a market. He favors locations where rent takes up a smaller share of household income relative to the national average. In his view, expectations of continued rent growth warrant caution when residents face budget pressures or have more rental options nearby.
A lower purchase price does not settle those questions. Fraser sees debt maturities as one factor that can bring sellers’ expectations closer to buyers’ valuations. However, he cautions against treating the seller’s financial difficulty as evidence that the buyer has found value. The price still needs to reflect the property’s operating needs, financing costs, and local competition.
“We’re never going to bet an asset on rates going down or cap rates going down,” he says. Capitalization rates relate a property’s operating income to its value. Fraser’s point is that an investment should not require more favorable valuation conditions to justify its purchase price.
His preference is to examine the returns available during ownership. “My experience running a hedge fund through the financial crisis helped shape how I assess risk,” Fraser says. “I focus on the cash remaining after expenses and debt payments, opportunities to reduce borrowing, and whether an investment can be held through weaker market conditions.”
For Fraser, a long holding period still requires discipline at the outset. Waiting can become more workable when the original purchase leaves room for setbacks. Investors who assume they can always sell quickly, he believes, may have fewer choices when financing becomes harder to obtain. According to Fraser, patience depends on whether a property remains financially sustainable. The purchase price and financing terms can influence an owner’s flexibility when market conditions weaken.
His approach places the investment decision on firmer ground by testing rent forecasts, financing terms, and competing supply before committing capital. The central question is whether the property can sustain ownership if recovery takes longer than expected.