A lot has happened in the past year. 

We’re not trying to belabor a sore subject, but based on the data presented early on the pandemic, it was easy to assume the worst for the multi-family real estate market.  

The data, while indeed complex, had some pretty clear commonalities and takeaways — Multifamily real estate is an industry heavily impacted by relocation trends, opportunistic real estate investment trusts, and ever-changing government regulations. And now that we’ve arrived at a post-vaccine chapter, what exactly can we really take away from these data trends? 

Well, we’ve done the research. We scoured the internet, sifting through various multifamily real estate industry articles written by thought leaders, industry experts, and national organizations who represent both renters and property owners. And we compiled all the important, need-to-know tidbits of information into one “year in review” report

So, what’s the bottom line information about the multifamily real estate industry that you need to know? 

What is the current state of multifamily real estate? 

Before we dive into the nitty-gritty of what our report uncovered, let’s cover some of the basics. 

What is multifamily real estate?

According to the folks at Rocket Mortgage, multifamily real estate can be defined as “a multifamily home is any residential property that contains more than one housing unit, such as a duplex, a townhome or an apartment complex.”

Keep in mind, multifamily housing looks different across the United States. You don’t need to live in a city in order to see examples of multifamily properties — simply look at your own hamlet, city, or town. Property owners have gotten creative with their investments, some have even converted former hotels, old sailor quarters, industrial spaces, Victorian-era mansions, and more into multifamily housing. The possibilities are truly endless, it’s just a matter of perspective. 

Who or what are the major key players in multifamily real estate properties?

There’s a lot of moving parts when it comes to multifamily real estate, so there are a few important roles to note: 

  • Real estate investors — Real estate investors purchase, own, rent, or manage a piece of real estate. Real estate investors can also be owner-operators. 

  • REITs — Shorthand for real estate investment trusts, REITs are “a company that owns, and in most cases operates, income-producing real estate. REITs own many types of commercial real estate, ranging from office and apartment buildings to warehouses, hospitals, shopping centers, hotels, and commercial forests.” 

  • Real estate agents and brokers — Real estate agents and brokers typically facilitate the purchase or sale of a property.

  • Property managers — Property managers are typically charged with overseeing the property and staff. Property managers can be supported by a larger property management company. 

  • Leasing agents — Leasing agents are on the front lines, working directly with renters throughout the lease signing and renewal process. 

Additional content you, or leasing agents, might enjoy: What’s your leasing agility score?

Has the media misrepresented the multifamily industry?

The short answer? Somewhat. 

The multifamily industry has been greatly impacted by the pandemic, but overall trends within the multifamily industry suggest three things:

  1.  How we view American migration must change.

  2. The eviction moratorium compounds pre-existing issues such as housing affordability.

  3. The more diverse, the better when it comes to real estate portfolio investments.

Is now a safe enough time to invest in multifamily real estate?

Mostly — for new investors, or current owner-operators looking to expand their portfolio, there is a major opportunity in the rebound. 

But how do we know this?

Because, based on our findings and research, we can tell you that the media went a little slap happy with the fear-mongering and clickbait headlines, and in turn got three major things wrong about the state of multifamily real estate in 2021.

Three things the media got wrong about the multifamily real estate industry

One — A mass exodus occurred, city life is going extinct!

This couldn’t be further from the truth. 

Yes, some people made permanent moves, while others temporarily migrated to greener (and less urban) pastures. However, the media painted an incomplete picture of American mobility, portraying cities like New York as empty with apartment buildings and rental properties abandoned.

Things looked dismal when they didn’t need to be.

"Out-migration did increase in many urban neighborhoods, but the magnitudes probably would not fit most definitions of an exodus. What is certain is that hundreds of thousands of people who would have moved into an urban neighborhood in a typical year were unwilling or unable to do so in 2020." — Stephan D. Whitaker, Policy Economist

So what did happen? Well, context is critical (and it doesn’t involve apocalyptic city scenes of abandoned buildings). Before the pandemic, migratory and relocation patterns hit a 73-year low — people just weren’t or couldn’t move.

When the pandemic took hold and life as we knew it came to a screeching halt, people relocated or were forced to move in order to pay the bills. Overall, vacancy rates were still pretty low: in Q1 2020, vacancy rates docked at 6.4%, then dropped to 5.6% in Q2, and rose back up to 6.7% in Q2 2021. 

Rent costs have also surged, fallen, and surged again — an economics case study in the natural playout of supply and demand. At the onset of the pandemic, urban centers were plunging in an attempt to draw renters back into the fold, places like San Fransisco saw a drop in 35% YoY, only to rise back to pre-pandemic numbers in 2021.

Long story short: The migration numbers tell a larger story about the natural evolution of America’s cities. But don’t worry, people aren’t abandoning cities. 

Related: How to drive renewals at every step of the renter experience

Two — The media’s not unreliable, the government’s unreliable!

When it comes to the eviction moratorium and renter relief funds, the media has been a bit of an unpredictable op-ed source.

Sure, some outlets have been critical of the moratorium, as well as the relief fund roll-out, but the media has struggled with striking a balance, oscillating between vilifying the federal government and praising the financial salve that the eviction moratorium intended to offer. 

As Rhino’s CEO, Parag Sarva, noted in an article about the eviction moratorium (albeit published a few months ago): “It’s been a time of uncertainty for both renters and landlords. Much of the media focuses on the 14% of U.S. renters behind on rent payments with limited access to the nation’s inefficient rental assistance programs. It makes sense that the news cycle is devoted to renters. 6.5 million American households are behind on their rent obligations, and the average debt is in excess of $3,000. And just 12% of the first $25 billion in funds have reached people in need due to loss of income from the pandemic. At the same time, financially burdened landlords are less likely to be a part of the current media narrative despite being on the receiving end of this funding crisis.” 

Much of this remains the same, with even less of the available funds for renters being dispersed — only $4.7B out of the $47B have been allocated to renters. The NAA has even moved forward with a formal lawsuit against the United States government, stating “the CDC’s order was first issued last September and has been extended several times, which harms the rental housing industry, jeopardizes the long-term viability of housing and sets a dangerous precedent for future disaster-response measures.”

Basically, all this is to say that the eviction moratorium and relief fund rollout sets a precedent for how the federal government (as well as the media) interacts with renters and receives feedback from property owners. 

Long story short: Future investors, pay heed to how the federal government navigates the NAA lawsuit, as well as the picture the media paints regarding its reception. 

Three — REITs were going four paws up; pull out investments now!

Just to reiterate, REITs are short for real estate investment trusts. Diving a little deeper from our initial description (and courtesy of the brilliant folks over at Investopedia), “real estate investment trusts (REITs) are a key consideration when constructing any equity or fixed-income portfolio. They provide greater diversification, potentially higher total returns, and/or lower overall risk. In short, their ability to generate dividend income along with capital appreciation makes them an excellent counterbalance to stocks, bonds, and cash. Real estate investment trusts own and/or manage income-producing commercial real estate, whether it's the properties themselves or the mortgages on those properties. You can invest in the companies individually, through an exchange-traded fund, or with a mutual fund.”

When the pandemic overthrew existence as we knew it, the stock market took a hit and REITs showed some signs of weakened ROI (return on investment). Understandably, analysts were worried — did this mean we were headed toward another economic recession?

Thankfully not at the moment because things aren’t as dismal as media analysts initially predicted and portrayed.

Again, context is vital, but overall, the market is on the rebound. After two years of subdued activity (as of June 2021), REIT's YTD activity clipped in at $70B, which is pretty impressive. And despite all that lost rent we were just talking about courtesy of the eviction moratorium, the market is showing signs of good health, with residential REITs up 42.5%. 

Long story short: If you’ve been waiting to invest in REITs, now’s a fine time to dip your toes in the water. 

Get the full picture

The multifamily real estate industry is doing pretty well, all things considered. There are still compounding issues, such as the high cost of labor and construction materials, along with the fallout of the eviction moratorium. But the data doesn’t lie — the multifamily real estate industry is making moves toward recovery. 

If you, daresay, enjoyed reading this article then it’s safe to say you may also enjoy the full report. To get the full picture of the data presented in this article, download our report.

Headshot of Monique Seitz-Davis
Monique Seitz-Davis

Monique Seitz-Davis, also known as Moe, is a senior writer at Rhino. Moe thinks glitter gets a bad rap and that security deposits are a trap. Or something. She is doing her best.