2026 Real Estate Outlook: Signs of Stabilization and What Investors Should Watch

“The good assets, they’re moving. The bad assets are still being, unfortunately, not moving at all.” — Daniel Roccanti, CPA

After a transitional 2025 that left much of the real estate industry feeling stuck, early signals in 2026 point to cautious improvement. In this episode of the Real Estate Industry Update, host Daniel Roccanti, sits down with Kyle Paxton to break down what’s changed, where the opportunities are and why disciplined investors are the ones best positioned to win this year.

The conversation covers a wide range of ground, from cap rate trends and rent growth challenges to a lending market that’s finally showing signs of life. Both Roccanti and Paxton emphasize that while the broader market is stabilizing, success in 2026 will come down to asset-specific strategy, conservative underwriting and a willingness to do the work at the property level. Florida-specific pressures like rising insurance costs and property taxes also get significant attention.

Resources

• James Moore Real Estate Industry Services
• Real Estate Industry Update Playlist
• Watch This Episode: 2026 Real Estate Outlook

Full Transcript

[00:02] Daniel Roccanti: Welcome to the Real Estate Industry Update. I’m your host, Daniel Roccanti, here with Kyle Paxton for another video. Today, we’re going to discuss the economic outlook for real estate here now that we’re heading into 2026, and how it looks compared to 2025. I think as most people who have been involved in real estate just kind of understand, 2025 was kind of a weird year.

[00:27] Daniel Roccanti: It was a transition year. It just seems like for most people in real estate, it was kind of a down year for everyone. And I don’t know about you, Kyle, but I can always tell how good of a real estate year is when I start preparing tax returns for our real estate brokers, and they’re always like, “Yeah, I had a down year.” And it seems like that was across the board for 2025.

[00:45] Kyle Paxton: Yeah, Daniel, you’re right. That’s been my observation, too. It does make our jobs easier, admittedly. Lower tax bills tend to be more friendlier conversations, but it is indicative of a “down transition year” like we’re talking about. We talk about real estate data moves pretty slow, right? We’re filming this on the back of Q1 of 2026.

[01:05] Kyle Paxton: We blinked, and now it’s April. And so we’re keeping this conversation pretty high level in what we’ve seen and kind of what we’re going towards in 2026. 2025 ended better than expected, and 2026, given what we’ve talked about here, there’s some more optimism.

[01:28] Kyle Paxton: And I do feel there’s some stabilization kind of in the market, and we’re starting to transition. Okay, last year was a weird year. We’re starting to digest the data, figure out where we go from here. And I think we’re gonna see a lot of that movement happen in 2026.

[01:45] Daniel Roccanti: Yeah, and Kyle’s right here. 2025, it actually kind of ended on a little bit of an uptick. It was nice. It actually ended by kind of doing a little bit better than projected. It doesn’t feel that way to anyone in 2025, but technically it did. On paper.

[02:02] Daniel Roccanti: And what that does is it kind of gives us a little bit of a ramp up for 2026, like, okay, we’re gonna have a better year. It’s not gonna be this overwhelming year. That’s not how real estate works, right? Real estate, one of the nice things is it moves a little bit slower. That means it goes up a little slower. It goes down a little slower as well.

[02:18] Daniel Roccanti: And so, this year, I think what we’re gonna see for 2026 is more like a selective reopening, but it’s gonna be better than 2025. We’re gonna start seeing that. So, let’s start getting into why 2026 is, this first quarter feels different from 2025 already. The market already feels better just from talking to other real estate brokers and everyone in the whole industry.

[02:42] Kyle Paxton: It just feels like everyone’s a little bit more optimistic. Yeah. So we’re starting to see where the improvements show up first, the things you typically see, right? Pricing, cap rates, actual deal flow, starting to see an uptick in these areas.

[02:59] Kyle Paxton: Generally more positivity across the board. You can’t distill this down into the nuances of particular asset class types. I think office is still kind of lagging behind the rest of the bus in that regard at a high level, especially in the local markets that our offices are in.

[03:19] Kyle Paxton: But overall, just starting with those kind of big ticket items of the price and cap rates and deal flow, we’re starting to see more momentum there. Daniel, you wanna take us into cap rates a little bit?

[03:38] Daniel Roccanti: Yeah. I mean, so cap rates is kind of the good just high level indicator of how the market is doing. And as Kyle and I here at James Moore, I mean, we deal with a lot of clients all over the country. I would say our core clients are kind of the South. So, we’re a little bit more, especially Florida specifically, so we’re really more involved. That’s just one thing with real estate, you gotta realize it’s really location specific.

[03:58] Daniel Roccanti: So, we’re gonna use some general terms here, but some areas are outperforming other areas. Asset classes are performing, like Kyle was mentioning. Office has always been in a tough spot ever since the pandemic, but we’ve seen certain things explode, like industrial has exploded. I’m starting to see that pull back. That’s just how the market works. When everyone jumps in, it starts pulling back.

[04:15] Daniel Roccanti: Multi-family has been having a really tough time in Florida right now. And just how that kind of looks. So, we’re kind of expecting… What we wanna just see is improvement here. So, when we’re looking at cap rates, what we’re really seeing is that it’s very selective on what cap rates are doing. Cap rates kind of overall are just pretty low, and we’re trying to get a little bit better improvement from cap rates.

[04:50] Daniel Roccanti: But I feel like the good assets, they’re moving. The bad assets are still being, unfortunately, not moving at all. They’re kind of just stagnant, and that’s how this market feels right now. It doesn’t feel like everything is down, but not everything is up. So, it’s really important to make sure, if I own real estate, is this a good asset? How can I improve this specific asset? Because that’s gonna be the biggest difference maker right now in this market.

[05:11] Kyle Paxton: And I see that kind of across the industry from the single family residential homes all the way through, specifically kind of in our Florida markets and things like that. That’s a common thing we’re seeing. Rent growth. So supply is easing. Purchasing power still isn’t back. But this part of the market is still 2025-ish, right? And we’re seeing some slow change here.

[05:38] Kyle Paxton: We’d already talked kind of about multifamily, but 2025 started with strong renter demand. But momentum cooled a little bit later in the year. By Q4, multifamily vacancy was just south of 5%. Effective rate growth 0.2% year over year. And then in 2026, average apartment rents rose to about $1,700, up 0.2% and 0.4% year over year.

[06:15] Kyle Paxton: But the year over year is down in Q1 2026 over Q1 2025. Like Daniel said, we are seeing some differences here regionally. Sun Belt’s cooled a little bit in rent growth, and we’re looking more at kind of the Midwest and mountain regions where we’re seeing more of an uptick in rent growth.

[06:35] Kyle Paxton: And so obviously each year this varies kind of by location. As Daniel mentioned, we see a lot of data. We have a lot of clients who enter multifamily, GPs located all over the United States that hit the Southeast hard over the last couple years. And we’re seeing some of that activity cool a little bit and pivot to other regions.

[06:56] Daniel Roccanti: Yeah, and I think rent growth here is something we want to look at. Because a lot of people, especially in the multifamily industry, 2025 was the first year we really got negative growth in rent. Not across every industry, but particularly multifamily.

[07:13] Daniel Roccanti: And so when you see something like negative growth, it just looks bad because we’re already, like we talked about, compressing our cap rates. Well, rent is going to immediately affect your cap rates and things like that. We wanna get that net operating income up, and rent’s a great way to do this, and we’re already getting many factors like our expenses and things are increasing.

[07:38] Daniel Roccanti: And so what we’ll really see as a good sign in this market is what’s gonna happen with our rent growth. Part of this also has to do with, if you remember a couple of years ago, rent was the opposite. It was growing probably a little too fast, right? And so what 2025 ended up being is a little bit of a correction year, but more of a plateau overall with a little bit of negative growth depending on the actual sector.

[08:08] Daniel Roccanti: I think what we’ll see back in 2026 is we’ll see that slight increase again, kind of get back on track. But we gotta remember, rents were going up 25, 30% a year just two, three years ago, and that’s a lot for a tenant trying to stay. Now of course that’s what the market had. Everything was going up at that time.

[08:27] Daniel Roccanti: But so we’re just seeing a little bit more of a steady market getting back to where we need to be. What I’d really like to see is just not negative rental growth. That’s the hardest one to plan for with negative. And so some of that had to just, there’s a lot of factors in it.

[08:48] Daniel Roccanti: The construction of multifamily over time, especially here in Florida, it really, multifamily just exploded everywhere. Now it’s a little bit overbuilt. That’s just how the market works, right? And then capitalism is gonna come in play here. There’s a correction, and so now we’re gonna build on that correction.

[09:07] Daniel Roccanti: And so I expect 2026 to have a little bit better year, and depending on what happens for the rest of the year, we’ll see how good of a year we can build off from there.

[09:25] Kyle Paxton: Absolutely, Daniel, and I’m gonna jump now into lending and kind of the lending environment here. I don’t know about you, Daniel, Q1, I’m seeing a little more activity in the lending space. Some refis going on. I see more movement. There’s demand for tax returns to get deals pushed across the finish line. So it does feel like the lending market is less frozen than it was kind of on the front end of 2025. More capital to go around, better demand for lending, and typically more confidence in credit.

[09:45] Kyle Paxton: But the average deal that we’re seeing still needs the right sponsorship, leverage, cash flow, exit story, the whole nine yards. I’m still having banks really dissect our tax returns, the statements that my clients are providing, and I’m having to do a heavy lift to get deals across the finish line just in helping interpret data.

[10:11] Kyle Paxton: It feels heavier than it’s felt in the last couple years in terms of that type of activity and, for lack of a better term, “pushback” on financial records that we’re providing from lenders. But I’m certainly seeing kind of more activity in that space to kick off the year in 2026.

[10:33] Daniel Roccanti: Yeah. I would say what I would give lending is, okay, we’re finally back open to, open for business. 2025 felt like no lenders wanted, at least not conventional lenders, they didn’t wanna dance. They all had to find alternative lenders. Nobody wanted to do anything, and it was really tough. Sometimes, depending on the sector, like office, no one could get any kind of debt financing for office in 2025.

[10:50] Daniel Roccanti: And so 2026, their dreams would just be like, “All right, we’re not opening up everything, but we’re gonna finally start accepting some loans again, start looking at some deals.” But like Kyle was saying, you still got a long road ahead of you. The interest rates that got cut several times at the end of 2025, but then they kind of stayed. They made that target of three and a half to three seventy-five. So that’s kind of where we’re at right now. The Feds will meet again here at the end of April, and we’ll see what happens there. There’s a lot of expectations that they probably won’t cut it again, but you never know.

[11:36] Daniel Roccanti: So it seems like the Feds are kind of okay where they’re at, and like, “We’ve cut the rates. Let’s now let the market do its thing.” And so that’s just gonna basically open it up. Okay, financing’s back on the table. But what does that look like for real estate and our clients? That just means that, one, if you have existing debt that’s already on the table that’s coming due here shortly, you need to start getting prepared for it.

[12:00] Daniel Roccanti: It doesn’t mean you have no options, but it does mean you have to understand what the banks are wanting. It’s a risk assessment to them. So you need to make sure your books are good, your tax returns are in order. What can you work on today to increase those numbers on your property? Make them look good.

[12:18] Daniel Roccanti: Work with the bank well in advance, a year before it comes due, and be like, “All right, what can I do?” There’s sometimes factors outside of just real estate, like, hey, the bank’s more likely to work with you if you hold more assets with them. There’s little things like that that we don’t think about.

[12:38] Daniel Roccanti: Or getting someone to vouch for you. And so really it’s just, all right, I got a year before this is going to come in. I don’t know exactly what the market’s gonna look… Banks are more willing to work with you, so that’s an uptick. Just realize they’re not just writing checks, though. Underwriting is still a tough process, and you need to expect that.

[12:59] Kyle Paxton: Absolutely. And I’m gonna jump now into another area that we’re seeing some consistency with 2025, and that is just our operating costs, right? And insurance, insurance is weird right now. Property renewals can look better, but the total cost stack and kind of all the add-ons everywhere else isn’t, and we’re seeing that kind of continue into 2026.

[13:22] Kyle Paxton: We’ve seen our clients really get squeezed on the operating costs across the board from our fees to everywhere else, right? So kind of mashes together into that one big box there. But 2026, I don’t think it’s gonna be kind of an expense normalization story at all through the end of the year.

[13:49] Kyle Paxton: It’s just a really, I think, different pressure points are arising in this year. And so you may have less pain within your property insurance premiums itself, but then more pain on these liability, or the liability costs we’re talking about, other operating costs kind of up and down the board.

[14:09] Kyle Paxton: Big ticket item in Florida we spend most of our time is property taxes, right? That conversation is right front and center right now. But we are seeing just increases in pretty much all operating costs across the board, and I don’t see that going away anytime in 2026.

[14:31] Daniel Roccanti: No, I would say this area is probably what feels the most like 2025. And I don’t think it’s really gonna change. Expenses are just it is what it is, right? I don’t think they’re coming down anytime soon. The most we can hope for is that they just level out, they kind of plateau.

[14:47] Daniel Roccanti: Like Kyle’s mentioned, some of the biggest ones, especially here in Florida, is property taxes and insurance. I noticed insurance prices, they were jumping for a couple years there, like 20, 30% every year. This year, it finally feels like it’s a little bit more of an average jump, with 3 to 5%, something in that area.

[15:07] Daniel Roccanti: Something that’s a little bit more I can budget for. Which is necessary because we already talked about rents not being able to increase, and so that’s just squeezing your profit. On top of the more expensive financing options if you had to refinance. And so when real estate doesn’t cashflow, it doesn’t really become a great option for you. And so what we’re probably seeing for 2026 is that it’s just gonna feel like 2025 when it comes to your expenses.

[15:42] Daniel Roccanti: So you need to realize that pricing’s not really gonna get better, so I really need to look into my specific asset. Because I’m probably not gonna be able to decrease my insurance costs generically. You can look at your policy, make some policy changes, and people have absolutely done that and found good ways for realizing I don’t need half this stuff in my policy, things like that.

[16:03] Daniel Roccanti: Property taxes, you’re very limited on. You pay what you pay for the most part. Unless you feel like you wanna go out there and actually take your valuation that the county does and say that, “I think you’re wrong.” You can do that. There are ways you can go out there and basically get your valuation changed, which can decrease your taxes, so that’s something you can always consider. But I think really here it’s just more about understanding the expectation. Costs in general across the board are not coming down, so look at my specific assets and figure out, okay, where am I overspending? Where am I not paying the most attention? Where can I really affect that net operating income, especially if I’m expecting rents not to really increase significantly.

[16:59] Kyle Paxton: Yep. And I wanna touch on one more thing as we wrap up here, talking about underwriting adjustments and as part of our midyear strategy here as we go into Q2 and onward for 2026. We talked about this already, but I think the theme of 2026 is similar in a lot ways in terms of new deals, it’s similar in a lot of ways to 2025 in that we’re still kind of in that period where we separate the really good real estate investors and the not so good, right?

[17:27] Kyle Paxton: And it’s gonna be much more our underwriting needs to be really, really targeted and market level, and not more macro on a national scale. We’ve already talked about some of the regional differences we’re seeing, particularly in multifamily and things like that. I think that’s gonna become more and more prevalent. That huge wave of multifamily in Florida is drying up a little bit or slowing down some. And so pivoting the strategy on, okay, that was the big wave. Where do we go now, right?

[17:50] Kyle Paxton: And so it’s really keying in and digging deep. It’s kind of that same theme as the lending, right? All of your models need to be much more scrutinized. You’re running much more conservative vacancy concession projections. Making sure you’re factoring in those operating cost increases, keeping in mind the different refinance scenarios, and being modest on exit cap compressions will really drive successful underwriting in this period.

[18:25] Daniel Roccanti: Yeah. I think the biggest difference in the market we’re in right now is it separates the really good real estate investors from just the casual real estate investor. The people that got in when the market was high and you can’t lose, right? Now, you can lose if you’re not doing the right things.

[18:49] Daniel Roccanti: So when you’re out here underwriting your properties, finding new properties, projecting, you really need to make sure you have a conservative model. What happens if I need, I’m gonna work on my vacancies, but I need to make sure that my deal still works if vacancies are worse than I think it will be. What happens when I wanna refinance and the market’s not where I want it to be?

[19:06] Daniel Roccanti: I see people all the time doing this. They go in there and they start budgeting expenses. They don’t budget that they’re gonna keep rising. When’s the last time property taxes have gone down? When’s the last time insurance has really gone down? You need to make sure that you understand that’s going, but still at the same time, not expecting significant bumps in rental properties.

[19:28] Daniel Roccanti: And then at the end of the day, I really think if you’re in real estate, it really comes down to the specific asset. Find the asset in the location that you believe, and that asset will be a difference maker. It’ll be an outlier from the market in general. Don’t look so much as the market is going to make you win more of it.

[19:49] Daniel Roccanti: That specific asset, what can I do to increase that specific asset? And by basically investing in that, that’s basically what real estate is at its core, is really like, hey, the market overall in real estate’s great, but I have the ability to go in and find the diamond in the rough, make changes, find where the missing pieces are, and then really increase the value of that property and the net operating income and things like that. And now I have this amazing asset because I was a difference maker.

[20:25] Daniel Roccanti: And so that’s what I feel like the market is for 2026. It’s just a generic uptick on everything. Now, it’s your time to go in there, be the difference, be the reason why your ROI and your investment is significantly higher than everyone in the market because of your skills and your experience that you bring to real estate in that specific asset.

[20:45] Kyle Paxton: You’re a good hype man, Danny. I’m fired up.

[20:48] Daniel Roccanti: Well, I don’t know about you, Kyle, but I want all my clients, and even potential clients, I want you to do a good job, right? And when you have good assets and you’re doing great out there and we’re all making money, believe me, I’m making money, we’re helping each other.

[21:02] Daniel Roccanti: The worst is when everyone in real estate is not making money. Everyone tightens up. No one’s happy. No one wants to pay the tax guy, I promise you that. Especially when no one’s money is made. But unfortunately, taxes have to get paid. Tax returns have to get paid whether you make money or don’t make money.

[21:18] Kyle Paxton: That’s right. And sometimes, as Kyle knows, it’s actually more complicated when they’re not making money. It can be very complicated.

[21:28] Daniel Roccanti: So wanna make sure that we’re helping out any way we can, which is just basically you’re the difference maker. Find the right asset. There are deals. There is gonna be… The market is slowly getting better, but it’s not just gonna come to you. You have to find it. Thanks for hanging around. We’ll see you next time.

[21:50] Narrator: To learn more about James Moore and Company’s Real Estate, Accounting and Business Solutions, go to jmco.com. And don’t forget to subscribe to our Real Estate Industry Update series to receive updates when new videos are released. If you’d like to be a guest or if there’s a topic you’d like to see covered on a future episode, contact us through our website or email us at info@jmco.com.

 

For the full discussion on where the 2026 real estate market is heading and how to position your investments for success, watch the complete episode here.

 

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