Invest InlandNW: October 2026

On September 16, the Fed raised rates for the first time in more than three years, and this week the 10-year Treasury topped 5.2%.

A lot of owners in the Inland Northwest spent the last three years waiting for rates to come down, but they went the other way. And rates touch every line that matters: what you can borrow, what a buyer can pay, and what a refinance actually puts in your pocket.

Many of the owners we talk to are bearish right now, and after the last three years, that’s fair. But there is a bullish story too, and the investors willing to look for it are buying at discounts.

This edition of Invest InlandNW lays out both sides on rates and pricing and lets you pick.

Reasons to Be Bearish

Debt is expensive, and proceeds are the real pain. Bank and credit union debt is pricing 150-250 basis points over SOFR. Agency debt is running roughly 165 basis points over the Treasury. A clean, newer asset lands in the mid-6s. A smaller property with imperfect in-place income lands in the high 6s to 7s.

Interest rates hurt cash flow, but the biggest hit is loan proceeds. Most loans written in the Inland Northwest today are constrained by debt service coverage, not by loan-to-value. When rates go up, proceeds come down, and they come down fast. If you planned to refinance $2 million out of a property this year, you may be looking at $1.5 million now. That is less real estate you can buy, less capital you can deploy, and it puts pressure on demand across the whole capital stack.

The rate bet went the other way. A lot of owners have been waiting since 2023 for rates to fall before refinancing, selling, or buying. Over those three years rents softened in many markets, expenses climbed, and the refinance that was supposed to get easier got harder. Waiting was not free.

The maturity wall came due anyway. Many loans that were extended in hopes of lower rates are maturing now, at the highest rates of the last five years, and into softening operations. An owner who was planning on a high-5s rate at maturity may be looking at the mid-6s. The refinance that was going to be cash out might be cash in, and a bridge note is an expensive way to push that problem out.

Selling takes time, and asking prices are still catching up. On 2026 closings across the region, the median property took about 105 days from listing to pending and 178 days from listing to closing. The properties that moved were the ones priced to today's income at today's cap rate, or that took a discount along the way. The ones still anchored to 2022 are the ones still sitting.

The bear case, summarized: cap rates have not risen enough, and prices have not fallen enough, to pay for the risk of owning and operating apartments today. A Treasury yields 5%+ with zero operations. A 6.7% cap rate is only about 1.5 percentage points more, and in the bear's eyes, a lot of multifamily still does not clear the bar.

Reasons to Be Bullish

Cap rates have already reset. The Eastern Washington average cap rate moved from roughly 5.4% in 2022 to around 6.7% on 2026 closings. Price per unit is off the 2022 highs by around 15% to 20%. The repricing that bears were waiting for has largely happened, and it shows up in the transactions that actually closed this year, not in list prices.

Buyers are underwriting the bear case for you. We know buyers who are getting bank and credit union debt in the low-6% range who still underwrite at 7%. They use debt as a pricing mechanism, because they want positive cash flow in year one and they do not know where rates will be at the takeout three years from now. That discipline buys a basis where very little has to go right. Operate the property well and cash-on-cash returns north of 10% by year two or three are on the table. When you are printing cash like that, the exit takes care of itself.

Discounts are real if you are in the game. On actively marketed properties, buyers who show up are negotiating off the asking price and buying solid real estate in the right locations at positive leverage from day one. Those opportunities are not priced like that on the market. You have to be evaluating properties, giving pricing feedback, and writing offers. You have to be swinging to see the fastball down the middle.

Sellers are getting creative. For an owner struggling to sell, seller financing can create a path to closing. A note at 5.5% to 6%, collateralized by a building the seller knows better than anyone, beats a Treasury, with cash at closing on top. Put it in second position and it gets more interesting: the bank lends 65% to 70% of value, the seller carries 25%, and the buyer comes in with very little equity and still cash flows because the price and the blended rate are right. The seller gets 75% of their cash at closing and a transaction that actually closes. On one property we underwrote this year, a seller second with a 7.5% interest rate behind a 75% senior loan lifted the buyer's levered return from roughly 19% to 23% with combined debt coverage still at 1.25x.

And rates are the upside, too. If a property cash flows with debt in the 7% range, every drop in rates from here goes straight to cash flow the day of a refinance. Buy with flexible prepayment terms and that upside is yours.

Which Camp Are You In?

If you're bullish, be in the game. Have relationships with lenders willing to lend in first position today, an operating track record that makes them want to, and the willingness to negotiate. The most capitalized buyers with a proven operating flywheel are getting pricing roughly a point better than a newer investor on a small transaction. Every offer you write is a rep.

If you're bearish, know what your property is worth today, not what it was worth in 2022. Value today is in-place net operating income at today's cap rate. The sellers who transacted this year priced to today’s values, got flexible on structure, and their properties closed. Low leverage is not a full shield either: if vacancy climbs with rates in the 7%s, the equity you assumed you could tap has gotten harder and less lucrative to reach. If the interest rate and multifamily rollercoaster ride is no longer working for you, getting off the ride is a choice worth exploring.

Looking ahead to next month: rates and pricing are a national story. Supply is not. The Inland Northwest is on its own supply clock, and the wave is rotating from one market to the next. In November we lay out where it lands, where it has already passed, and what that means for the bulls and the bears.