The pandemic has put a lot of strain on the housing market. Home purchase prices are more expensive than ever, and most markets now have a shortage of inventory that makes it tough to find a single or multifamily home at any price.
To identify what is helping to drive demand for multifamily housing by investors and determine how this trend affects renters relying on these units for housing, EquityMultiple compiled a list of five ways investing trends have affected multifamily real estate.
Imbalanced supply and demand have disproportionately affected certain demographics and types of buyers while higher-income homebuyers and investors have been able to snatch up more of the market.
Investors aren’t just focused on individual units, either. Multifamily properties—which are properties that include more than one housing unit, whether a duplex, a townhome complex, or an apartment building.
These have become a hot commodity for investors during the pandemic—and for good reason. Properties tend to be low risk and high reward for the right investors and offer the ability to profit off of multiple units with one property purchase.
The multifamily rental market took a hit early in the pandemic, but it has since recovered and is now thriving in most metros. As of mid-2021, rent growth was up 2.5% year-over-year and was back to pre-pandemic levels—and it has only continued the upward momentum since.
1) Recent Rental Growth Has Been Explosive for Multifamily Properties
The demand for multifamily housing is extremely high right now and likely to stay that way for the time being. November housing data from the census shows national vacancy rates in the third quarter of 2021 were 5.8% for rental housing—an extremely low rate.
2) The Demand for Multifamily Units is Strong and is Likely to Continue
There was a swift decline in multifamily leasing activity at the start of the pandemic, but that downward trend is no longer an issue. New leases have been on the upswing since February of 2021, and there is also an interesting trend of current renters renewing their existing leases.
3) Leases are Being Renewed and Renters are Sticking Around