Core Multifamily Buyers Turn More Bullish, But Don’t Loosen Their Models Article originally posted on Globe St. on March 4, 2026 Core multifamily investors ended 2025 feeling better about buying than at any point in the past year—but they are not rewriting their models just yet, according to a new CBRE survey that underscores a cautious, metrics-driven thaw in sentiment rather than a full-fledged turn in the market cycle. In CBRE’s Q4 2025 Multifamily Underwriting Survey, 76% of respondents reported positive sentiment toward core acquisitions, up from 64% in Q3 and just 44% a year earlier. That shift coincided with a 9% year-over-year increase in multifamily investment volume in 2025 and expectations for a similar gain in 2026, suggesting the mood change is translating into actual capital deployment rather than remaining a paper recovery. Despite the stronger risk appetite, buyers have not materially loosened their return thresholds. Average going-in cap rates for core multifamily ticked up only two bps in Q4 to 4.75%, while exit cap rates held at 4.95%, leaving unlevered IRR targets unchanged at 7.70% for the third straight quarter. The narrow adjustments underscore that, for now, investors are expressing optimism mainly by willingness to transact within current pricing bands rather than by underwriting more aggressive performance. The sentiment shift is also asymmetric between strategies. While core buyers grew markedly more positive, value-add buyers saw a pullback. Positive sentiment in that cohort fell to 63% from 70% in Q3, suggesting investors may be favoring cleaner, lower-risk business plans as capital markets stabilize. Sellers, meanwhile, remain largely neutral across both core and value-add, with only minimal positive or negative sentiment registered in the CBRE survey. Cap-rate spreads compress as investors wait for a “normal” gap Pricing dynamics in Q4 point to growing competition for core product but not yet to the kind of pricing expansion that would mark a new cycle peak. For core assets, the spread between going-in and exit cap rates narrowed to 20 bps, with the survey indicating expectations that this spread will widen over the next two years as going-in cap rates compress more than exit cap rates. Even with that projected widening, respondents expect it will take time to re-establish a more typical 50–60 bp gap, implying that investors still see a transitional period ahead rather than an immediate return to pre-dislocation norms. Value-add pricing shows a similar but even tighter profile. Going-in cap rates for value-add assets rose three bps quarter-over-quarter to 5.26%, while exit cap rates stayed flat at 5.38%. That move squeezed the value-add spread to just 12 bps from 15 bps, indicating that investors are still demanding a relatively modest cap-rate premium at exit for taking on execution risk. At the same time, unlevered IRR targets for value-add compressed for the eighth consecutive quarter to 9.36%, reflecting persistent competition for higher-yielding opportunities even as buyers grow more selective. Market-level figures suggest a broadly stable backdrop with only incremental shifts rather than major repricing. For core assets, three markets—Charlotte, Miami and Philadelphia—saw slight going-in cap-rate compression in Q4, while Denver, Indianapolis and Los Angeles recorded increases, with no market moving more than 25 bps in either direction. On the value-add side, only Charlotte showed a lower going-in cap rate quarter-over-quarter; Dallas, Indianapolis and Los Angeles experienced increases, again within a relatively tight band. Rent-growth expectations cool to match slowing fundamentals The CBRE report shows investors resetting rent-growth assumptions to align with the deceleration many markets experienced in the second half of 2025. Underwriting assumptions for annual rent growth over the next three years eased to 2.7% for core and 3.1% for value-add assets in Q4, down from 2.8% and 3.2%, respectively, in Q3. Those adjustments are marginal in absolute terms but signal that buyers are resisting the temptation to bake a rapid re-acceleration into their base cases. This measured stance is consistent with a broader narrative of disciplined optimism. The data points to investors leaning into improved liquidity and sentiment while still underwriting to a muted growth environment, particularly in the near term. With an unlevered core IRR target flat at 7.70% and modest rent-growth expectations, the underwriting picture remains grounded in conservative assumptions rather than in a belief that fundamentals will quickly snap back to peak-era trends. The survey also highlights where sentiment is improving fastest. CBRE notes that buyer and seller sentiment strengthened most in Sun Belt markets such as Atlanta and Charlotte, reflecting continued conviction around long-term demographic and employment drivers even as near-term rent growth moderates. Those markets are likely to remain focal points for both core and value-add strategies, especially if financing conditions continue to improve and sellers grow more willing to meet buyers on price. Underwriting stable, but more sellers expected as debt markets thaw One of the more striking themes in the CBRE report is how little the core underwriting metrics moved quarter-over-quarter despite the marked improvement in buyer sentiment. Sixteen of the 19 markets tracked showed stable IRR targets for core assets in Q4; only Denver and Philadelphia saw increases, while Los Angeles registered a decrease. That balance suggests local nuances—such as perceived operating risk or regulatory environments—are driving modest adjustments, but the national underwriting framework is largely intact. CBRE notes that although bid–ask spreads are narrowing, some investors remain reluctant to sell, even as buyers become more active. This lingering hesitation has kept a lid on available product, limiting how far and how fast pricing can move. However, the firm expects more selling activity in 2026 as investors seek to capitalize on a more liquid debt market with attractive financing options. This shift could unlock additional volume and test how durable the recent sentiment gains really are. If that expectation proves correct, the next phase of the multifamily cycle may be defined less by a wholesale reset of underwriting and more by incremental adjustments in cap rates, rent-growth assumptions and IRR targets as buyers and sellers re-engage in greater numbers. For investors, the CBRE Q4 2025 survey reads less like a turning of the page and more like a preview of a market that is finally beginning to function again—still cautious, still data-driven, but increasingly open for business.