Four National Debt Milestones, Four Very Different Apartment Markets
It took the United States 192 years to borrow its first trillion dollars. The most recent trillion took about five months. On August 18, 2026, total federal debt crossed $40 trillion, and it got me wondering what the apartment market looked like each time the debt passed another $10 trillion.
At every milestone, the market was in a very different place. And while the debt doesn’t have much to do with rents, it has a lot to do with interest rates, which is how it reaches apartments.
$10 trillion, September 2008: Falling demand
The debt crossed $10 trillion on the last day of September 2008. Lehman Brothers had failed two weeks earlier, and Fannie Mae and Freddie Mac had just been placed into conservatorship.
For apartments, the downturn showed up first in demand. Payrolls were already down about 1.6 million jobs from their peak at the end of 2007, and the losses kept coming into early 2010. With fewer people working, renters absorbed only about 61,000 units over the prior year, according to data from Realpage Market Analytics, roughly a third of the 176,000 that were delivered. In 20 of the 50 largest metros, demand was negative, meaning more units emptied than filled, and national occupancy slipped to 93.7%. Investors pulled back too, with annual deal volume down to $60 billion and cap rates at 6.63%, according to Real Capital Analytics. The Federal Reserve, or the Fed, still had its target interest rate at 2% at the end of September, but by December it was essentially zero.
$20 trillion, September 2017: Building at full speed
Nine years later, the recovery was well along and developers were busy. In our data, about 326,000 units were delivered in the year-ending 3rd quarter 2017, nearly twice the 2008 pace, with another 586,000 under construction. Renters absorbed most of it, 280,000 units, which held occupancy at a healthy 95% while rent growth settled at a modest 2.7%.
With the 10-year Treasury yield at about 2%, the 5.68% average cap rate gave investors a cushion of roughly 3.6 percentage points over Treasuries, the widest of the four milestones.
$30 trillion, February 2022: Record demand and cheap money
Then came the pandemic. The debt went from about $23 trillion to $30 trillion in two years as federal spending surged, and apartment demand took off at the same time. Renters absorbed 711,000 units in the year-ending 1st quarter 2022 by our count, twice the 350,000 delivered, and occupancy climbed to 97.5%, the highest in Realpage data going back to 2000.
Money was about as cheap as it gets, with the Fed’s target rate near zero, the 10-year Treasury yield at 1.81% and a 30-year mortgage rate at 3.55%. That helped push transaction volume to $347 billion and cap rates down to 4.59%. Six weeks after the debt crossed $30 trillion, the Fed began raising rates.
$40 trillion, August 2026: Higher borrowing costs
The latest $10 trillion took about four and a half years. Over that time, our data show the apartment stock grew by 1.86 million units, more than in either earlier stretch.
Renters have nearly kept pace with all that new supply, absorbing 305,000 units in the year-ending 3rd quarter 2026, slightly less than the 318,000 delivered. Occupancy is 95.4%, and rents are up 0.9% from a year ago.
The big difference from 2022 is the cost of capital. The 10-year Treasury yield is at 4.71%, and at 5.39%, cap rates sit only about 0.7 percentage points above it, the thinnest cushion of the four milestones.
Putting $40 trillion in perspective
In percentage terms, each new $10 trillion is a smaller step than the one before it. The first jump doubled the debt, the next added about half again, and the latest added roughly a third. The economy kept growing too, which is why federal debt as a share of gross domestic product (GDP) has barely moved since early 2022, going from 120.4% to 122.6%.
Per household, though, the debt has more than tripled since 2008, while median income is up 74%. In 2008, each household’s share of the debt came to about $85,800, or roughly 1.7 years of median household income. Today it’s about $297,100, close to 3.4 years of income. Interest on that debt came to about $7,200 per household in fiscal 2025, or $600 a month. That’s roughly 3.8 months of average apartment rent, up from about 2.2 months at the $10 trillion milestone.
Since the $10 trillion milestone, payrolls have grown by about 22 million jobs and the population by nearly 39 million people. Over the same stretch, the apartment stock we track grew by roughly 5 million units, or about one new apartment for every four and a half new jobs.
Where developers built
Those 5 million new apartments weren’t spread evenly. Nationally, Realpage data show the apartment stock is up 32% since the $10 trillion milestone, but across much of the Sun Belt the build-out was far bigger. Austin and Charlotte have essentially doubled their stock, and Nashville, Raleigh/Durham and Salt Lake City are each up more than 75%.
Rent growth has eased where new supply has been heaviest, in markets like San Antonio, Denver and Charlotte, where deliveries over the past year equaled more than 2% of existing stock. At the other end, rents are firmest in San Francisco and San Jose, where deliveries came to less than 0.5% of stock. Demand, though, is still strongest relative to size in Phoenix, Austin and Fort Worth, so two of the markets that built the most are also still drawing the most renters.
The price of money
The more the government borrows, the more it pays to carry that debt. In fiscal 2024, net interest on the federal debt reached $880 billion, more than the $734 billion America’s renters paid in rent that year. That hadn’t happened since 1999, and in fiscal 2025 interest climbed further, to $970 billion.
For apartment owners and investors, what matters most is what all that borrowing does to Treasury yields, which set the benchmark for apartment loans and valuations. As the debt crossed $40 trillion in August, the 30-year Treasury yield climbed to its highest level in about 19 years.
Inflation and Fed policy push yields around as well, so to see the debt’s effect it helps to look at the term premium, the extra return investors want for tying their money up in long-term Treasuries. Federal Reserve Bank of New York estimates had it below zero for much of 2016 through 2021. By late September it was back around 1 percentage point by the Federal Reserve Board’s measure, and investors tend to demand more of it when there’s more debt to absorb.
Since August, both of those forces have pushed in the same direction. On September 16, 2026, the Fed raised its target range a quarter point, from 3.75% to 4%, to get inflation back to 2% sooner. By September 30 the 10-year Treasury yield had reached 5.29%, which on paper leaves cap rates barely above Treasuries, though cap rates usually take a few quarters to catch up. Mortgage rates followed, with Freddie Mac’s 30-year rate hitting 7.28% on October 1. At that rate, the monthly payment on a median-priced home is well above what it costs to rent an average apartment, which gives many would-be buyers a reason to keep renting.
For investors, a cushion that thin between cap rates and Treasuries usually means they are counting on income growth to close the gap, or that prices still have some adjusting to do. At about $194 billion a year, deal volume is running at a little more than half the pace of the $30 trillion milestone, as buyers and sellers try to agree on what buildings are worth.
Those higher rates are now catching up with loans taken out near the $30 trillion milestone. Many were made when the 10-year Treasury yield was below 2%, and they’re maturing with it above 5%. The Mortgage Bankers Association estimates about 13% of multifamily mortgage balances mature in 2026, but only about 4% of the balances held or guaranteed by Fannie Mae, Freddie Mac, the Federal Housing Administration (FHA) and Ginnie Mae. That means most of the loans maturing in 2026 came from banks, life insurance companies, debt funds and commercial mortgage-backed securities (CMBS). Owners in that spot usually have to add equity, extend at a higher rate or sell, and each of those choices shows up in deal volume and pricing.
What to watch from here
Much of what happens next depends on long-term rates. If yields keep climbing, financing costs and cap rates will feel it. If inflation cools and the Fed doesn’t need to raise rates again, long-term yields could come down, which would widen the gap between cap rates and Treasuries again.
On the supply side, fewer new apartments are on the way. By our count, units under construction have fallen from a peak of 1.1 million in early 2023 to about 550,000, so deliveries will thin out over the next couple of years.
Population growth is slowing at the same time. The Census Bureau estimates net international migration fell from 2.7 million to 1.3 million in the year-ending July 2025, and it projects about 321,000 by July 2026. That means fewer new renter households, at least for a while.
The debt will keep growing, and as it does, the number I’ll be watching most closely is the 10-year Treasury yield, which drives the cost of apartment loans and, over time, what buildings are worth.
