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Multifamily Market Trends in 2021

Multifamily properties remain popular with investors due to the opportunity for passive income and the steady demand for housing for an ever-growing population. If you’re considering investing in multifamily properties, it’s important to understand the current market. Here are some top multifamily market trends you should be aware of in 2021 and beyond.

Life Bridge Capital is a leading real estate syndication company. We offer our investment partners the opportunity to leverage shares of multifamily rental properties into a passive monthly income. Learn More

The Pandemic Multifamily Housing Shake-Up Continues

After surviving a full calendar year in a new world dominated by the virus, it seems all things lead back to COVID-19. The multifamily housing market is no exception. 

The past year rocked the real estate market as a whole, and that has more than trickled down into the multifamily segment. Now, the trend to watch for in 2021 is whether multifamily housing preferences will drift back in the direction of pre-virus life or continue in the same direction. Here’s how the outlook appears now:

Demand Shifting to Suburbs

Millions of white-collar workers were sent home in March 2020 and have not been in an office since. During that time, many left the expensive urban areas behind for cheaper living and more space. There is a similar trend among the 25 percent of Americans who had someone in their household lose their job in 2020. 

Whether due to cost-savings or lifestyle changes, the suburbs and smaller cities saw greater demand for multifamily housing in 2020 than in the past. In fact, many of the best multifamily markets in 2021 are smaller cities and suburban areas.

Financial Uncertainty Among Tenants

We see many curious trends lingering from 2020 regarding tenant finances. Unemployment remains high, but now a concerning number of Americans are considered long-term unemployed.

Some tenants have seen unexpected cash in the form of three stimulus checks, enhanced and extended unemployment benefits, and a soon-to-be increased child tax credit. Assuming the extended unemployment ends, however, and there are no further stimulus checks in 2021, will we see a greater share of tenants with difficulty making rent?

Given that the negative economic consequences of the pandemic are disproportionately impacting lower-income adults, Class A multifamily properties may see greater-than-normal migration in 2021.

Foreclosure Moratorium

Whether the current foreclosure moratorium will be extended or allowed to lapse after June 30 remains to be seen. It prevents the physical eviction of tenants who would be rendered homeless, thereby making a marked impact on income produced by multifamily properties. 

If the moratorium does expire, the ability of landlords to access the courts in a timely manner will be an interesting trend to watch. As courts operate on restricted staff due to the virus, and sometimes budget, the backlog of cases continues to grow. Landlords in many places may find that the end of the moratorium may not bring immediate relief, due to judicial unavailability to hear the case.

Increased Rental Demand

Many of the trends wrought by the pandemic have the potential to make multifamily investing a bit more uncertain this year. The housing market, though, has the potential to create some positive trends for multifamily investors as well. 

Climbing housing prices, excessive demand for remarkably low inventory, and economic uncertainty combine to create one message: now is a great time to rent. Millennials are a generation that should be leaving the rental market and purchasing first homes, but their inability to get into a house can boost the demand for multifamily housing. 

Fewer options combined with competitive bidding among buyers is leaving many would-be homeowners in the conundrum of lowering their expectations or just stepping out of the market altogether. Many prefer to hold out for a buyer’s market in the not-too-distant future, choosing to sign leases in the interim. 

Final Thoughts

The unique conditions of the current housing market and the lingering pandemic give multifamily investors some unusual trends to be on the lookout for in 2021. Investors should keep an eye on the government’s pandemic management strategies to prepare for the ongoing changes in consumer behavior and resources. Until the housing inventory stabilizes, however, renting will continue to remain in high demand, making multifamily properties a potentially lucrative investment. 

Life Bridge Capital is a leading real estate syndication company. We offer our investment partners the opportunity to leverage shares of multifamily rental properties into a passive monthly income. Learn More

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