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The few people that can get something out of the ground this summer and deliver in ‘25/‘26 will be well positioned as the wave of deliveries this year is absorbed over the next few.
This is my take as well, and still think there are tailwinds in multifamily once we get past some of this supply and economy (hopefully) stabilizes. Home ownership will continue to be out of reach for a large swath of people, particularly younger generations.
IMO you have to essentially bet on market/submarket right now and accept that underwritten returns/YOC will be lower than you'd like with prudent assumptions. Obviously doesn't help the story on getting the deal capitalized, but otherwise you have to make assumptions not rooted in any sort of reality right now on rents, cap rates, static and trended exit basis, etc.
A good buddy of mine is at a very large merchant developer who gets extremely aggressive. Production is the sole focus. When a deal doesn't work, they'll go through typical VE (which never completely solves the return issues), but otherwise it's just constantly jacking up rents. It has worked for them historically but I personally don't think I could ever work at a shop where you think you'll get top-of-the-market (or completely unproven) rents on almost every project.
Flip side of that is my shop, who underwrites pretty damn conservatively and methodically. We have zero deals in our pipeline right now and are finishing off the last 6 that we already started. We'd like to start tying up some land again, but to other posters' points, very little pencils right now even with land basis of essentially $0. If you can go buy a completed deal for replacement cost or less, why bother?
As an aside for anyone focused on multifamily in western MSA's, Vegas is a bloodbath right now. Operations continue to decline and there have been virtually no Class A trades in the past 10 months outside of a 2010-vintage off-market deal that just closed on the west side for $265k/door. We built a project almost next door back in 2020 for $150k/door and sold it in early 2021 for ~$290k. Our cost basis on two new dev projects further south is more like $280k/door, and when we UW them before land close we thought static basis should be in the $340k range. Brutal
It's a brave new world in terms of basis. Just crazy seeing what we were building/selling things for pre-COVID vs where we are today.