Sun Belt multifamily overbuild — the 2021–2023 vintage
Sun Belt apartments delivered in 2021–2023 are the cycle's most prominent overbuild. Austin rents fell 3.5% YoY in 2025, Denver -1.9%, Phoenix -1.7%. PwC/ULI 2026 calls the supply/demand dynamic "disappointing for the next few years." Low-supply Northeast and Midwest markets reaccelerated (NY +3.5%, KC +3.0%).
The supply digestion will take through 2027–2028 in oversupplied markets. CoStar reported 555,000 multifamily units absorbed in 2024 against record deliveries; Yardi forecasted 536,000 completions in 2025 versus 663,000 in 2024. Construction starts have dropped 40%+ from 2023 levels (PwC/ULI), which sets up an undersupply condition for deliveries 2027–2029 in markets where construction takes 24+ months.
The asset class isn't in distress in aggregate — it's in geographic divergence. The same year, New York rents +3.5%, Kansas City +3.0%, New Jersey +3.0%, while Austin -3.5%. Within Multifamily, where you bought matters more than when.
For individual investors looking at multifamily REIT exposure: tilt toward Northeast/Midwest-weighted operators (Equity Residential, AvalonBay, Essex on the coasts; Mid-America in mid-tier markets) rather than pure Sun Belt (Camden, Mid-America's Sun Belt portion).