On the one hand, multifamily owners are sure to feel a significant amount of pain in the coming months from missed rents as millions of Americans have been laid off or put on furlough as the result of pandemic-related shutdowns. On the other, people will continue to need housing, and reduced revenue is better than none.
In addition, with fewer people being able to afford homeownership—in the first week of April, loan applications to buy a home were down to 2015 levels, according to the Mortgage Bankers Association—tenants that under different circumstances might have become homeowners will remain apartment renters.
That being said, the amount of pain in the multifamily sector will likely be unevenly split. Developers with projects that have just opened or were in the pre-leasing stages right before COVID-19 arrived will likely struggle to achieve full occupancy and pay down their loans. Long-time owners of older, stabilized buildings in major cities, where market rents have been trending sky-high in recent years, might get off with an unwelcome, but manageable, hit to their profits.