May is a big month for the portfolio. Here is where things stand across our deals and in the market right now.
Summary
- Pasadena 172 closing: The 172-unit Houston acquisition is in the final stretch, with close expected by end of May. Only a few investor slots remain.
- Houston supply tailwind: New multifamily deliveries in Houston have dropped to a 13-year low, supporting projected rent growth of 2.3% in 2026 with average rents approaching $1,410/month.
- Hermiston 17 renovation update: All exterior enhancements are finished, and the last of 17 units is now nearing completion. The property is leasing up and moving toward stabilization ahead of a potential refinance or sale later this year.
- Transaction market gridlock: Brokers across the Pacific Northwest and Texas are reporting a slow start to 2026, with sellers holding asking prices above what buyers can underwrite. Relief may come this summer.
- National vacancy holds at 7.3%: The U.S. Census Bureau reported a 7.3% rental vacancy rate for Q1 2026, roughly flat with a year ago as the supply wave continues to work through the system.
- Fed holds for a third straight meeting: The FOMC kept the federal funds rate at 3.50%-3.75% at its April 28-29 meeting. Rate cuts remain uncertain, with the committee more divided than at any point since 1992.
- Pipeline contracting: Multifamily starts are projected to fall to roughly 392,000 units in 2026 and decline further in 2027, setting up better fundamentals for patient value-add investors entering 2027.
Market Update
Vacancy Stabilizes, Supply Contracts, and the Fed Stays Put
The national rental vacancy rate came in at 7.3% in Q1 2026, according to the U.S. Census Bureau, essentially flat with the prior two quarters. The supply wave is still present but clearly decelerating. Multifamily starts peaked at 547,000 units in 2022 and are projected to fall to approximately 392,000 units in 2026 before declining further in 2027. Forecasters broadly expect absorption to overtake deliveries in most oversupplied markets by the second half of this year, which would set the stage for vacancy compression and firmer rent growth heading into 2027. Workforce housing has held up better than Class A throughout this cycle, and that dynamic is expected to persist.
For our Houston market specifically, the picture is more favorable right now. New multifamily deliveries in Houston have dropped to their lowest level since 2013, with rents projected to rise 2.3% in 2026 and average monthly rents approaching $1,410. That is the kind of supply-constrained submarket dynamic that underpins the Pasadena 172 thesis.
Investor Opportunities
Pasadena 172: Final Days Before Close
The Pasadena 172 acquisition in the Houston submarket of Pasadena, Texas is in the final stretch. Assumption approval has been secured by the servicer, and we are targeting approval from Fannie Mae, with a close shorter thereafter, by the end of May. This is a 172-unit, Class C workforce housing community acquired at a basis we believe is difficult to replicate in the current market.
If you want to learn more about how deals like this work we would love to talk to you.
Investor Insights
Why Buying Basis Matters More Than Buying Market
When deal volume slows and sellers hold firm on price, the temptation is to wait for the market to clear. That is often the right move. But the deals that get done in a slow market tend to share one trait: the buyer is acquiring at a basis that works at today's financing costs, not at rates from 2021.
Basis protection is straightforward in concept. If you pay less per unit on entry, you need less rent growth to hit your return targets, you carry more cushion if vacancy ticks up, and you have more room on refinance or sale if cap rates do not compress as expected. In an environment where the Fed is on hold, rents are grinding rather than surging, and transaction volume is thin, buying at the right price is the primary risk management tool available. Getting the entry right is where most of the return in a deal is ultimately made or lost.
Deal Activity
Hermiston 17 Stabilization; Pasadena 172 Approaching Close
The Avenues in Hermiston, Oregon has reached a milestone: with the last unit nearing completion the focus has shifted to stabilizing occupancy and pushing rents toward the top of the market range. A refinance or sale is on the horizon for later this year, and the NOI picture is strengthening as new leases are signed.
In Texas, Pasadena 172 is moving through the final steps toward a late-May close. The deal came together in a market where most transactions are stalled, and the entry basis reflects that. Interest has been high with less than a quarter of shares left after the first month.
Looking Forward
With Hermiston 17 nearing full renovation and Pasadena 172 about to close, the portfolio is in a strong position heading into summer. The broader market looks to be approaching an inflection point as supply contracts and absorption catches up. If you want to discuss how you can get involved with EagleCap, schedule a quick call below or reach out directly.