A Look at Where the Multifamily Market Stands: NAREE

NMHC’s Caitlin Sugrue Walter assessed the state of the multifamily market and gave the latest updates on a range of issues during NAREE’s annual conference.
Image by Henry Becerra via Unsplash

As 2020 comes to a close, many in the multifamily industry are looking back on the unprecedented events of the year and how they impacted the market. During the National Association of Real Estate Editors’ annual conference Dec. 9-10, Editorial Director of Multi-Housing News and Commercial Property Executive Suzann Silverman moderated a panel in which she spoke to National Multifamily Housing Council’s Vice President of Research Caitlin Sugrue Walter on how multifamily fundamentals have fared this year compared to previous years and where things stand on major issues like rent collections and potential stimulus relief.

Fundamentals shift

The U.S. rent inflation annual rate experienced a big drop in 2020, something that didn’t come as a surprise to Walter. “It wasn’t a big shock because we recommended our members institute rent freezes at their properties,” she said.

Looking at vacancy rates, figures showed the national number was actually down slightly compared to the second and third quarters of this year for professionally managed units. However, the figure has gone up significantly compared to the third quarter in 2019.

U.S. rent inflation figures. Image via NAREE 2020

On the rental collections front, which has gotten a lot of attention across the industry and has been tracked meticulously by NMHC since April, recent figures show that payments have been slowly falling month over month and since the same time period last year.

“While you’re not even looking at a 2-percentage point difference…it’s actually pretty big numbers,” said Walter, especially when factoring in how many millions of professionally managed units are included in NMHC’s Rent Payment Tracker. “Owners and managers are having to do more with less,” she said. “While the numbers are still good, they’re not where they were, and there’s more increases on maintaining properties because so many people are at home, plus the added PPE costs.”

Smaller owners feeling the impact

It’s not just falling rent collections that are leading to a decline in property revenues. Many properties that have rentable commons space for classes and events aren’t receiving the normal revenue that they normally would. And if a resident is on a payment plan, the property owner isn’t receiving the full rent.

“With the added stress of someone in their unit 24/7, there’s a lot more wear and tear on the unit than there may have been before,” said Walter.

While most NMHC members have reported being able to make do, a few members with properties around theme parks have struggled more. However, a larger, national company can handle revenue struggles better than smaller, mom & pop landlords with just a handful of properties.

“If you are a person that owns a couple fourplexes as a revenue stream and each one has a vacant unit and you can’t fill that, that’s a big hit to your revenue,” said Walter.

Eviction moratoriums and rent relief

Industry groups have expressed some hope that federal rent relief could come for multifamily before the end of the year, when both the CDC eviction moratorium and unemployment benefits passed in the CARES Act are set to expire.

However, while there is a lot of talk about potential deals in Congress, nothing concrete has come to fruition yet. As of this week, more than 1,000 groups have signed on to a letter penned by the National Low-Income Housing Coalition to Congress, urging the legislative body to extend and improve the CDC’s nationwide eviction moratorium.


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We recommended rent freezes, but we also recommended not to evict folks due to financial considerations,” said Walter. “In an ideal world we’d get federal assistance. If we had that assistance, payment numbers would stay where they are and the eviction element would not be there, because folks would be able to pay rent.”

Earlier this week, Moody’s Analytics found that nearly 12 million renters across the country will owe an average of $5,850 in back rent and utilities by next year, according to a report from the Washington Post. The findings come after Moody’s Chief Economist Mark Zandi said in August that nationwide, tenants could owe $70 billion in back rent by the end of 2020. The current $908 billion bipartisan stimulus bill in Congress would include $25 billion in rent relief.

“That would be a good bridge to get us to the next bridge, to next package, but it won’t help everyone,” said Walter.

Long-term outlook

U.S. Census Bureau data on the share of young adults living with parents. Image via NAREE 2020

Markets dependent on tourism and entertainment—like Los Angeles and New Orleans—have taken the hardest hit with rent collections due to unemployment. Many renters are racking up credit card debt to pay rent, utilities and basic needs, worrying many advocates in the industry about future financial ramifications for renters.

However, despite the serious issues and stress the multifamily industry has experienced this year and is continuing to experience, Walter said NMHC has an optimistic outlook for the sector.

“In the long term, we’re still really positive,” she said, pointing to the share of people living with their parents, which has reached historic highs. With the millennial generation beginning to age out of the young adult generation, the homeownership rate for millennials is lower than it was when previous generations were the same age.

“That does make us think there’s a longer renter lifespan for this generation and perhaps the next generation as well when you look at trends,” said Walter “This makes us think if we can get through this COVID-19 period, the outlook is still very good for multifamily.”