Seventeen percent of apartment executives with loans coming due say they or their clients may face foreclosure on some properties, according to the National Multifamily Housing Council’s October survey of apartment market conditions, released Oct. 22. The survey of 130 apartment industry CEOs and senior executives found financing conditions deteriorating sharply over the past three months, as the jump in long-term interest rates made both borrowing and selling harder.
All four of the survey’s indexes came in below 50, the breakeven level that separates improving from worsening conditions. The Debt Financing Index fell to 10, from 46 in July. The Equity Financing Index fell to 17, from 44. The Sales Volume Index dropped to 22, from 46. The Market Tightness Index, which tracks rents and vacancies, slipped to 47, from 57 three months earlier.
Numbers behind the drop
The NMHC release ties the slide to the bond market. The yield on the 10-year Treasury has averaged 5.23% so far in October, the council said, up 63 basis points from July and 117 basis points from a year earlier.
- Debt: 81% of respondents said it was a worse time to borrow than three months ago. Two percent said it was better, and 17% saw no change.
- Equity: 66% said equity financing had become less available. One percent saw more, and 28% saw no change.
- Deal flow: 61% reported lower sales volume than three months earlier. Four percent reported higher volume, and 35% said it was unchanged.
- Rents and vacancies: 26% said markets were looser than three months ago and 21% said tighter. More than half, 53%, reported no change.
“Higher rates of inflation have caused longer-term interest rates to spike in recent months, leading to an increase in the cost of both debt and equity capital,” NMHC Senior Director of Research and Chief Economist Chris Bruen said in the release. “These higher rates have also led to a pullback in apartment sales, as potential buyers demand lower valuations to make their deals pencil.”
The refinancing question
The October survey added a special question on maturing debt. Twenty-two percent of respondents said they do not have many loans coming due and are relatively unaffected. Among the other 78%, NMHC reported:
- 61% said lenders’ debt-service-coverage requirements (54%) or loan-to-value limits (39%) are keeping them or their clients from refinancing the full amount of maturing loans. Respondents could cite either or both.
- 45% said they or their clients will put in more equity to refinance.
- 39% said lenders are allowing modifications and extensions for now.
- 16% said they or their clients will use mezzanine debt or preferred equity to fill the gap.
- 17% said they or their clients may face foreclosure on certain properties.
Debt service coverage measures a property’s income against its loan payments. When rates rise, the same building supports a smaller loan. An owner who borrowed against a property at a low rate may find that a new loan at today’s rates does not cover the old balance, which is where the extra equity, extensions and gap financing in NMHC’s list come in. In the release, Bruen said many owners who borrowed at very low rates in 2020 and 2021 now face that choice between refinancing at much higher rates and seeking modifications from their lenders.
Three months, a different market
The change from the summer survey is large. In NMHC’s July survey, conditions had tightened, with the Market Tightness Index at 57. At the time, Bruen pointed to a pickup in job growth and fewer new apartment deliveries. Capital was already harder to find in July, but none of the financing or sales indexes had fallen below 44.
The council’s development survey last month pointed the same way. In NMHC’s September construction survey, 29% of developers said they had started fewer projects than in the prior quarter.
Mortgage borrowers are seeing the same rate pressure. The 30-year fixed mortgage rate posted its biggest weekly rise since 2022 during the run-up. For apartment owners, the effect shows up in valuations: when buyers demand lower prices to make deals work, sales slow and the property values lenders use to size refinancing loans come under pressure.
On our reading, the survey does not show a collapse in renter demand. A Market Tightness Index of 47, with most respondents reporting no change, describes rents and occupancy that are roughly holding. The stress is in the capital stack. NMHC’s 17% foreclosure figure is the share of respondents who said foreclosure “may” happen on certain properties, not a count of distressed loans. Even so, it is a clear sign in the council’s data that the 2020β2021 vintage of cheap apartment debt is becoming a problem for some owners.
The survey was conducted Oct. 1β15, 2026. More multifamily coverage is in our commercial real estate section.
