Bill Wilhelm shares some predictions for the multifamily property sector in 2026
The need for multifamily properties is still robust, no matter where you are. While demand is still strong, supply is starting to lessen. According to CRE Daily, 2026 is forecasting the completion of approximately 422,000 units down from 536,000 projected units in 2025. What’s driving this decline is high interest rates and construction costs due to ongoing tariffs and supply chain delays.
However, the outlook for multifamily isn’t bleak. In 2026, we will be entering a point of stabilization. While we just experienced one of the biggest construction booms in over 40 years, this has also led to slowed rent growth and increased vacancies. Now, developers and construction firms are being more cautious and producing multifamily projects in locations where buyers and renters will thrive. Projects are not only being developed to satisfy renters and buyers for 2026, but to keep them there for the long run. As we work within the market-rate and affordable housing sector, we are exploring how these markets are both experiencing demand and supply setbacks.
Affordable housing
Much of R.D. Olson’s portfolio is in California, where the need for affordable housing continues to grow due to high costs of living. Thus far, the state has only been producing around 13,000 affordable housing units per year, whereas it needs approximately 125,000 according to All Home. In 2026, the state will be looking to pass AB 736, which provides $10 billion in general obligation bond funds to support the construction, rehabilitation, and preservation of affordable housing and permanent supportive housing. This bill could be monumental in funding the development of affordable housing for several income brackets with building lifespans of over 55 years. Additionally, the current state budget, AB/SB 131, supports the accelerated development of affordable housing through streamlining projects from the California Environmental Quality Act (CEQA challenges) and funding programs to reduce homelessness. However, construction firms should continuously be monitoring funding for programs nationwide. In the US, federal programs like Community Development Block Grant and the HOME Investments Partnership Program could end as the administration will eradicate funding – which can significantly stall developments.
In 2025, R.D. Olson completed 64 affordable units and we currently have 476+ in progress. While supply is trying to even out with demand, the need for affordable housing continues to skyrocket in California, so we expect to see continued growth in 2026.
Market-rate housing
Due to stabilization, market-rate housing will see a slight decline in development, however it varies per location. In the City of Los Angeles, there is a 5.5 percent tax on sales for projects over $10 million, causing developers to look at surrounding areas.
For R.D. Olson, we continue to see excellent demand and opportunity for housing projects outside of Los Angeles. In 2026, we will be completing Vintage Farms, an $80 million residential village in Murrieta, a smaller hillside town that lies between Los Angeles and San Diego. The project is within a prime development opportunity within the Inland Empire, as the region has lower costs to build and more land available. While demand is stabilizing in the region, the project will bring 330 units spread across 11 buildings. Projects like these are becoming more popular as they provide opportunities for families and young renters to live an affordable lifestyle while being within an hour from major metropolitan areas. They also provide an escape from city life and more access to nature. However,
with vacancies over six percent (Avison Young), the Inland Empire will be facing more risk than some other Southern California counties as rent growth may continue to be muted. The region will also be reeling from a significant surge of construction over the past year, which makes developers question whether to pursue projects as demand will need to catch up with the activity that was pursued.
Orange County, which possesses a sub five percent vacancy rate, one of the lowest in the US, will be experiencing a positive net-in migration, the first time since 2015 (Institutional Property Advisors). As the market is already one of the strongest in California, multifamily development remains promising for the coming year due to its strong economy and desirable lifestyle. Many leading companies are headquartered in Orange County, bringing more professionals to live there over Los Angeles or San Diego. The region also brings a suburban feel, attracting families looking for comfort and safety. Even with robust demand, developers and construction firms will see less starts in the region as the priority will be to await current projects to their completion. This will also lessen competition among developers and construction firms as there isn’t a race to start something new.
For R.D. Olson, the slowdown in construction starts is definitely something we are aware of and have faced previously. To mitigate business risks, we are consistently in contact with developers, 77 percent of which we have worked with previously, to highlight what’s transpiring in the market and plan to ensure developments are completed when the time is right. Even as construction won’t be as robust in different sectors compared to previous years, 2026 will be ample time to plan innovative projects for when construction starts grow again towards 2030.
Bill Wilhelm is President of R.D. Olson Construction. Over the past 30 years, Bill has been a driving force behind R.D. Olson Construction’s rise as one of the nation’s top general contractors. R.D. Olson Construction is one of the top 40 general contracting firms in California, and is a premier builder of multi-unit properties, hotels, office, retail, education, senior living projects and more.