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With the U.S. economy in a recession, unemployment numbers sky high and COVID-19 cases surging in the south and west, multifamily owners and operators face challenging times ahead. And things may get worse before they get better, according to a new special report from Yardi Matrix.
The report is based on a study of 107 major metros, with data reflecting April and May 2020 asset performance. Over that period, multifamily asking rents dropped .4% nationally, and twice as many markets saw rents decline as opposed to increase.
Renters are looking for less expensive units, with the biggest impacts in the sector felt by Class A+ properties. Rents for “luxury lifestyle” properties dropped by -1.2% over the last two months, compared to a decline of .5% for “renter by necessity” properties.
“Multifamily’s nearly decade long run of healthy performance increases came to an abrupt and unexpected end this year,” said Jeff Adler, vice president of Yardi Matrix. “Job losses have been particularly high among apartment renters, and simply collecting rents and maintaining occupancy is a new area of focus for owners and managers.”
Multifamily had a long run of strong performance – asking rents grew by 26% nationally between January 2015 and 1Q20. But going forward, the future looks cloudy at best.
“The shape of the recovery remains unclear. More importantly, the pandemic is spurring changes in working conditions and social trends that will impact housing demand for years to come,” states the report.
What’s ahead will be determined by a complicated combination of economic factors, public health metrics and renters’ feelings about the future. If renters decide to eschew urban apartments for a more distanced standard of life in the suburbs or smaller cities, multifamily could be in for a prolonged pain period.
Gain all the insight of the national analysis in this special multifamily report from industry data leader Yardi Matrix.
Yardi Matrix offers the industry’s most comprehensive market intelligence tool for investment professionals, equity investors, lenders and property managers who underwrite and manage investments in commercial real estate. Yardi Matrix covers multifamily, student housing, industrial, office and self storage property types. Email [email protected], call (480) 663-1149 or visit yardimatrix.com to learn more.
