2026 Midterm Elections Could Have Major Implications for Multifamily Real Estate

As voters head to the polls for the 2026 midterm elections, multifamily owners and investors have more than congressional races to watch. Housing-related measures appearing across the country could influence everything from property taxes and rent regulations to development costs, infrastructure investment and housing supply.

For multifamily investors, these policy decisions are particularly important because relatively small changes in operating expenses, taxes or regulatory requirements can have a meaningful impact on net operating income and property valuations.

Housing Policy Takes Center Stage

Housing affordability continues to be a major issue across the United States. In response, state and local governments are considering a variety of approaches designed to address rising housing costs and limited supply.

Some proposals focus on increasing housing production and reducing development barriers, while others would place additional restrictions on rental property owners.

California remains one of the most closely watched markets. Proposition 45, for example, seeks to streamline portions of the environmental review process for certain essential projects. Reducing regulatory delays could help shorten development timelines and lower costs—two factors that have become increasingly important as developers contend with elevated construction, financing and insurance expenses.

California voters are also considering Proposition 1, which would authorize $11.3 billion in general obligation bonds. Approximately $10 billion would support the creation and preservation of affordable rental housing, while additional funding would expand housing opportunities for veterans.

If successful, measures aimed at accelerating development could provide a model for other states struggling with housing shortages.

Rent Regulation Remains a Concern

While some initiatives are designed to encourage new housing, others could create additional challenges for apartment owners.

Redwood City, California's Measure E is one example. The proposal would establish additional rent-control and tenant-protection requirements, including restrictions on annual rent increases, relocation expenses in certain lease terminations and right-to-return provisions following major renovations.

Policies like these continue to generate debate throughout the multifamily industry.

Supporters argue that stronger tenant protections can improve housing stability and affordability. Apartment owners and industry groups, however, warn that restrictive rent policies can make it more difficult to offset increases in property taxes, insurance, maintenance, payroll and capital expenses.

When operating costs rise faster than rental income, owners may also have less capital available for property improvements and future development.

Property Taxes Could Shift Investment Economics

Tax policy is another major issue investors should monitor.

Florida's Amendment 3 would reduce the state's non-homestead property assessment cap from 10 percent to 5 percent. For owners of existing multifamily properties, slower increases in assessed values could potentially reduce future property-tax growth.

However, investors should continue to carefully evaluate how properties will be assessed following a sale.

For acquisition underwriting, relying solely on a seller's current property-tax bill can significantly underestimate future expenses. A post-sale reassessment can materially change projected net operating income, cash flow and ultimately the value of an investment.

The broader effects of property-tax restrictions also deserve consideration. Reduced tax revenue could place additional pressure on local governments, potentially affecting infrastructure and municipal services that contribute to the long-term attractiveness of individual markets.

North Carolina Could Offer Greater Tax Predictability

North Carolina voters are also considering measures with potential implications for commercial real estate investment.

One proposal would require the General Assembly to establish limits on annual increases in local property taxes. Another would lower the constitutional ceiling on the state's income-tax rate.

For investors, greater predictability surrounding property taxes can make long-term underwriting easier. At the same time, lower tax collections can create tradeoffs if municipalities have fewer resources available for transportation, infrastructure and public services.

North Carolina's continued population and business growth makes these policies particularly relevant to multifamily investors evaluating opportunities throughout the state.

Infrastructure Funding Could Unlock New Development

Hawaii is considering a different approach through a proposed constitutional amendment that would allow counties to issue bonds supporting housing-related infrastructure and community development.

Infrastructure is often one of the largest barriers to new housing development. Projects may require significant investment in roads, utilities, sewer capacity and other public improvements before construction can move forward.

Creating additional financing mechanisms for these improvements could make certain projects more feasible and potentially open new areas to residential development.

What This Means for Virginia Multifamily Investors

While many of these ballot initiatives are taking place outside Virginia, the issues behind them are highly relevant to owners and investors throughout the Commonwealth.

Virginia continues to face many of the same pressures affecting multifamily markets nationwide: housing affordability, limited supply in high-demand areas, elevated construction costs, higher insurance expenses and the need for continued infrastructure investment.

For investors evaluating opportunities in markets such as Hampton Roads, Richmond, Northern Virginia and other growing areas of the Commonwealth, understanding the regulatory environment is becoming just as important as analyzing rents, occupancy and cap rates.

Changes to zoning, property taxes, development requirements or landlord-tenant regulations can materially alter the economics of an investment. At the same time, policies that encourage new development, infrastructure investment and economic growth can create opportunities for both existing owners and new investors.

The 2026 election cycle reinforces an important point: multifamily investment performance is increasingly connected to public policy.

Successful investors should look beyond today's financials and consider how local and state policy could influence an asset over the next five, ten or even twenty years.

At The Uzun Group of Marcus & Millichap, we closely monitor the economic, regulatory and investment trends shaping Virginia's multifamily market. Our team works with apartment owners and investors throughout the Commonwealth to evaluate market conditions, identify opportunities and position assets for long-term value.

Considering selling, acquiring or simply curious what your multifamily property is worth in today's market? Contact The Uzun Group for a complimentary property valuation and market analysis.