Challenges for Multifamily May Be Ahead, Yardi Matrix Reports


Rent growth has flattened and transactions slowed, but collections and occupancy remained strong through July

SANTA BARBARA, Calif., July 30, 2020 – COVID-19 ended a decade of strong multifamily fundamentals and injected uncertainty and volatility that will affect the sector for months or years to come, according to a new seasonal market outlook from Yardi® Matrix.

Four months in, the initial economic shock has subsided and economic implications have become significant. More than 50 million Americans have filed for unemployment benefits; the unemployment rate was 11.1% in June. Initial hopes for a “V-shaped” recovery were overly optimistic, and experts now believe full recovery won’t happen until the population is confident about health measures.

But although the long run of multifamily rent growth has halted, expectations of calamity—such as widespread non-payment of rents and loan delinquencies—did not occur. Rents turned negative in the second quarter for the first time since the aftermath of the global financial crisis. Over the previous five years, rents grew by an average of 2% in every second quarter alone.

Though investment activity dropped sharply in the second quarter, there are more investors seeking to buy apartments than those looking to sell. Many investors are looking for distressed and undervalued properties. Multifamily is likely to face a lesser long term impact, as many investors prefer the long-term demand fundamentals compared to other real estate investments.

All development activity has now been significantly impacted by COVID-19. The pandemic has weakened the supply pipeline and will delay projects that have not yet broken ground. “We have reduced our initial forecast for 2020 deliveries to 250,000 units, down from the 320,000 units we projected at the beginning of the year,” states the report.

As the virus remains active and federal stimulus funds expire, the second half of the year could be difficult for the apartment sector. To find out what’s ahead, download the Yardi Matrix U.S. multifamily outlook for summer 2020.

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 to learn more.

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Yardi® develops and supports industry-leading investment and property management software for all types and sizes of real estate companies. Established in 1984, Yardi is based in Santa Barbara, Calif., and serves clients worldwide. For more information on how Yardi is Energized for Tomorrow, visit