Is Now a Good Time To Buy Multifamily?

Multifamily real estate has long been considered a stable investment, even during periods of high interest rates and recession. This is because multifamily properties are typically seen as recession-proof, providing essential housing to people no matter the economic climate. Some key factors that make multifamily an attractive investment option include its potential for high returns, its ability to generate income regardless of market conditions, and its low levels of risk.

According to a report completed by CBRE in 2019, there have been five recessions over the last 40 years. CBRE evaluated the performance of multifamily, industrial and office real estate during the last two of those recessions (2001 and 2008-09). Multifamily rental rates exceeded those in the industrial and office sectors in the 2001 recession and dominated over all major property sectors in the 2008 - 09 recession.

2001 recession due to terrorist attacks

The 2001 recession was due to the dot com downfall and the 9/11 terrorist attack. The recession continued until the fourth quarter of 2003, and that was when the multifamily sector began to grow in rents. However, the office and industrial sectors saw a deeper decrease in rents for a longer period. The cumulative rental decline for multifamily was less than 8% while the industrial and office suffered a 17 % percent decline and retail 14%.

2008-2009 housing crisis

During the Great Recession of 2008-2009, single-family housing was the hardest hit, but compared to office, industrial and retail, multifamily experienced the lowest level of rent decline. People defaulted to apartments for housing causing a major benefit for the multifamily sector.

While the downturns of 2001 and 2008-2009 impacted the overall real estate sector, multifamily suffered the least in recovery time and rent decreases. Lessons learned from our past provides encouragement for the current recession.

If you're considering investing in multifamily real estate, there has perhaps never been a better time than now. With interest rates on the rise and the economy still struggling to recover from the recession, many people may be hesitant to take on new investments. However, multifamily properties are well-suited to weather these difficult conditions, making them an ideal choice for investors looking for stability and high returns.