The State of The Multifamily Market Right Now

The 2020 calendar saw its last page turn and everyone, without exception, was happy to say goodbye to a year that nobody wants to remember. It’s exciting to have entered a new year and we’re all hoping that 2021 will be a complete change for the better. Many passive investors in multifamily real estate are wondering what the new year will bring, so I’ll review some current trends that will help to show what we might expect.

By way of background, I’m a multifamily syndicator, owner-operator, and investor in properties in Texas, Georgia, and Florida. We have 2,300 units, and my company is currently looking at properties in the Carolinas. Our focus is on Class B properties and we do value-add improvements to push rents and increase income.

In March of 2020, just as COVID hit the United States, there were many dire predictions about multifamily properties. It was predicted to be the “Armageddon,” with high vacancy rates and falling prices, but fortunately, those predictions never came to pass. Rather than dwelling on the past, let’s take a look at the current multifamily trends that are important to know now.

Occupancy and Prices are Stable

Occupancy is holding steady, with no huge shifts in either direction. Everyone was curious about what would happen to occupancy rates due to COVID, but their worst fears never materialized. Early negative predictions indicated that occupancy rates could fall by 10% to 20% or more. In fact, occupancy is currently running at 93% to 100%.

While many buyers were sitting on the sidelines waiting for “fire sale prices” on multifamily properties to appear, nothing happened. There hasn’t been an increase on cap rates or a decrease in prices because properties are doing well, and there’s simply no justification to lower prices. The only price declines are properties wi