03/25/2026
Here is what most people get wrong about real estate in an inflationary environment.
They assume that because mortgage rates are high and the Fed is holding firm, real estate is a bad place to be. That assumption confuses the cost of entry with the performance of the asset itself.
Oil is now running at around $100 per barrel, up more than 50% from just a few months ago. PCE inflation is expected to accelerate to 3.5% by April, the highest reading since May 2023, with futures markets now pricing in only one rate cut in all of 2026. That is the environment we are in. And within that environment, specific real estate asset classes are not just surviving. They are structurally positioned to benefit.
Here is the logic. When inflation rises, the cost of building anything goes up. When the cost of building goes up, less gets built. When less gets built in a market that is already undersupplied, the value of what already exists increases. Rents follow replacement cost. Income adjusts. And the tax structure of real estate, specifically depreciation, continues to shelter that income in ways that stocks and bonds simply cannot.
Multifamily properties in particular have attributes that help mitigate inflation's impact, including short-term leases that allow for more frequent rent adjustments, the ability to enhance value through physical improvements, and tax benefits such as depreciation that reduce taxable income.
The asset classes that struggle in this environment are the ones with long fixed-income leases, heavy new supply pipelines, and no ability to adjust rents. Think Class A luxury apartments in overbuilt Sun Belt markets. Class A luxury multifamily in Sunbelt markets that experienced aggressive development is among the biggest underperformers heading into 2026, with peak supply hitting precisely when demand is flattening. Business Wire
The asset classes that win are supply-constrained, workforce-oriented, existing residential in markets where you cannot build your way out of the shortage. That is a very specific, very identifiable target. And it requires knowing where to look.
If you want to talk through what this means for your next purchase, I am happy to have that conversation.
Carrie Couper, [email protected]