As seen on Colorado Real Estate Journal
For the past two years, Denver’s multifamily investment market has been stuck. Buyers wanted lower prices. Sellers refused to budge. Transaction volume fell nearly 40% below its five-year average, and both sides dug in, waiting for conditions to shift in their favor. But a new force is now entering the picture – one that doesn’t care about stubbornness or patience – and it’s about to move a significant number of Denver apartment owners off the fence, whether they are ready or not.
That force is loan maturity. The wave of debt originated at historically low rates in 2020 and 2021 is now coming due. For owners who locked in 3% to 4% financing at the height of the market, the reset is brutal: Refinancing today means stepping into a dramatically higher rate environment, often requiring fresh equity injections just to make the new debt service work. The choice – refinance at a painful rate, bring additional capital to the table, or sell – is no longer just theoretical. It’s a difficult choice for many landlords across the Denver metro area, and the decisions owners make in the next 12 to 18 months will define the investment landscape for years to come.
The math that’s forcing the conversation. Consider a typical Denver apartment building acquired in 2021. A buyer who paid at or near the market peak – when median multifamily pricing reached roughly $340,000 per unit – likely used a five-year loan at a rate in the low to
mid-3% range. Today, that same loan is maturing into a market where refinancing costs significantly more, and where net operating income has been compressed by two-plus years of flat or declining rents and rising property insurance and other operating expenses. The debt coverage ratio that looked comfortable at origination may now be razor-thin or underwater.
For some owners, refinancing is still the right call – particularly those with strong equity positions, properties in tight submarkets, and the balance sheet to absorb a rate increase. But for a meaningful segment of the market, especially those who purchased aggressively at peak valuations with high leverage, the refinance path requires writing a check to the lender just to keep the building. That is a difficult conversation to have with partners and investors.
Why selling is looking more viable. Here is what has changed on the sell side: Pricing has stabilized. After falling roughly 18% from the 2021 peak, Denver multifamily values have largely stopped declining. The current median of approximately $281,400 per unit has held steady over the past year, suggesting the market may have found a floor. For an owner staring at a painful refinance, that floor matters – selling today does not necessarily mean taking a catastrophic loss. For longer-hold investors, it may simply mean selling at a 2019 or 2020 price, which is not the disaster it might appear on paper.
At the same time, the buyer pool – while not deep – is active. Private investors have been acquiring Denver multifamily assets steadily, accounting for roughly 70% of recent transactions. These buyers are targeting value-add, suburban properties at manageable price points, underwriting to today’s fundamentals rather than peak assumptions. For motivated sellers, a willing and capable buyer exists. The question is whether the two sides can close the remaining gap in price expectations.
What owners should be doing right now. The worst outcome in this environment is a forced sale with no preparation. Loan maturity events do not sneak up on anyone – the dates are known well in advance. That means owners with 2020 or 2021 vintage debt should already be stress-testing both paths: modeling the refinance scenario with realistic current rates and NOI projections and simultaneously getting a current broker opinion of value to understand what the sale market would yield today versus in 12 months when supply conditions improve further.
One underappreciated factor: selling in 2026 may produce a better outcome than waiting for the market to fully recover. As the supply pipeline empties and rent growth accelerates into 2027, buyer expectations will also rise – and the value-add narrative that drives private buyer interest today may compress as properties get cleaner. Selling into a recovering market, rather than a recovered one, is often where the best relative pricing occurs. Owners who wait for a perfect market may find that the buyers willing to pay a premium have already moved on.
Denver’s multifamily market is not broken – but it is in the middle of a necessary reset. For owners who acquired at peak leverage and now face maturing debt, the dilemma is real and the clock is ticking. The good news is that both paths – a strategic sale or a thoughtful refinance – are executable today. The key is making the decision proactively, with clear eyes on the numbers, rather than letting the lender make it for you.
