Small multifamily lending activity rose during the first half of 2026. According to the latest Small Multifamily Investment Trends Report from Arbor Realty Trust and Chandan Economics, originations on loans with original balances between $1 million and $9 million reached an annualized pace of $71.6 billion through the second quarter. At this pace, originations are running 2.8% above the $69.6 billion total for 2025, placing small multifamily on pace for a third consecutive annual increase.

Los Angeles Remains a Top Destination for Small Balance Multifamily Investment
The L.A. market for small balance multifamily has been a standout throughout the current economic expansion. Cap rates have remained below national trends for both the rest of the small balance market and the average set by all multifamily properties. Despite higher risk appetites among borrowers, lenders remain cautious as loan-to-value ratios (LTVs) have moderated.
Looking ahead, a disciplined lending environment will reduce L.A. small balance multifamily’s sensitivity to any market corrections.
Produced in conjunction with Chandan Economics and tailored for the small multifamily investors, this report will explore recent changes in:
- Cap Rates & Spreads
- LTVs
- Debt Yields