The Unique Benefits of Multifamily Assets in Today’s Economy

The housing market boomed through most of the pandemic. However, some speculate we might be teetering on the edge of a recession. While the real estate market is cooling off slightly, including the fact that mortgage applications are down 16% from a year ago, this is not necessarily “bad news” for real estate investors.

There are many factors that are influencing the housing market right now. Some of the most significant of these are inflation, supply chain challenges, and increased interest rates. Inflation is the worst that it has been in forty years. This has kept home prices high, but it has made it increasingly difficult for people to buy homes. This in turn further increases the demand for multifamily housing, and drives rent prices higher.

Supply chain challenges have existed throughout the heart of the pandemic. This is because there have been labor shortages and major disruptions to international commerce due to COVID regulations. Supply chain issues were worse at the start of the pandemic. But, it is projected that supply chain issues will continue affecting the real estate market well into 2023.

Interest rates are also on the rise. While they hit record lows beneath 3% during the beginning of the pandemic, they are now over 5%. They could continue increasing steadily as the fed tries to get inflation under control. If the federal reserve continues to raise interest rates, then it could cause the market to go into a recession.

But despite the turmoil that is happening in the market right now, there are many advantages of multifamily real estate compared to other types of assets. Historically, multifamily assets are considered recession resistant. Here’s why: