Why the Next Phase of Real Estate Growth Will Reward Clarity, Patience, and Proven Execution

BY DAVE CAVAN, FOUNDER & CHAIRMAN, CAVAN COMPANIES

After decades in real estate and finance, one lesson holds true: markets recover long before the headlines say they do. The challenge is not predicting what comes next but recognizing when fundamentals begin to realign beneath the noise.

That moment is happening now. As we move toward 2026, the signals are subtle but unmistakable.

Capital Is Returning Selectively

Private real estate transaction volume is rising after two years of pullback. CBRE reports that global investment increased by 13 percent year over year through mid-2025, led by U.S. housing and logistics assets. Debt spreads have narrowed by roughly 75 basis points since late 2024, and lenders are beginning to re-enter the market with optimism.

Institutional investors, from pension funds to family offices, have raised their average real estate allocation to 11% of total AUM, the highest level in a decade, according to Preqin’s 2025 Global Real Estate Report. Capital is not waiting for perfect clarity; it is pursuing durability.

Supply Is Tightening While Demand Holds Firm

Even after a wave of multifamily completions, the United States still faces a housing shortage of more than 4.3 million units, according to Harvard’s Joint Center for Housing Studies (2025). Homeownership affordability has fallen to its lowest level in 38 years, pushing more households toward rental options that offer both privacy and permanence.

This imbalance between cost and accessibility is structural, not temporary. It ensures that well-located rental housing, particularly single-story and suburban communities, will remain one of the most resilient segments of the real estate market.

A Rational Recovery Is Taking Shape

Cap rates have widened modestly, construction starts are down 17 percent year over year, and land pipelines are thinning—clear signs that the market is re-establishing balance. Inflation has cooled from 6% to 2.8% percent, giving the Federal Reserve room to stabilize rates.

The combination of lower input costs, disciplined lending, and sustained demand is setting the stage for what can best be described as a rational recovery: growth based on fundamentals rather than speculation.

The Middle Market of Real Estate Is Reasserting Itself

The extremes of the past few years, ownership becoming out of reach and oversupply in multifamily, are giving way to a more balanced middle ground.

This is where long-term investors find opportunity: housing that meets real demand, at sustainable price points, in markets that continue to attract population and employment growth. It is not the speculative edge of the market, nor the overbuilt core, it is the stable center where consistent performance lives.

The Role of Build-to-Rent in a Balanced Housing Market

Over the past decade, Build-to-Rent has emerged as the most balanced response to the nation’s housing shortage. It fills the gap between ownership that has become financially out of reach and multifamily that often lacks space or privacy.

Data from Yardi Matrix shows BTR occupancy averaging above 96% nationwide with consistent rent growth despite volatility in broader housing markets.

This stability reflects a simple truth: families still want the feel of a home, but with flexibility and professional management.

For experienced investors, the Build-to-Rent segment offers what few other asset classes can — steady yield, inflation resilience, and tangible community value.

How Smart Capital Will Approach the Next Cycle

The investors who lead in 2026 through 2028 will not chase yield; they will pursue consistency. Their focus will be on:

Hard assets in markets with continued population inflows such as the Sun Belt, Mountain West, and Midwest.

Long-term financing structured with conservative leverage.

Sponsors with proven delivery and operational discipline.

Assets designed to perform through both inflationary and deflationary environments.

This is not the time for experimentation. It is the time for steady execution and clarity of purpose.

Perspective in a Noisy Market

Real estate has always rewarded patience and punished panic. The noise will continue, rate speculation, political headlines, and short-term volatility, but the long-term story remains unchanged: people need housing, capital needs yield, and disciplined execution connects the two.

Investors who act with conviction in moments like this do more than preserve capital; they position themselves to multiply it.

The next generation of great portfolios will not be built when the headlines turn positive. They are being built now.

About Dave Cavan and Cavan Companies

Dave Cavan is the founder and chairman of Cavan Companies, a Scottsdale-based real estate firm with more than five decades of experience in residential development and investment.

Recognized as an early leader in the Build-to-Rent sector, Cavan Companies has developed and managed thousands of homes nationwide, including its signature Bungalows communities— single-story rental neighborhoods designed for modern living and long-term value.