COVID’s 5 Least & Most Impacted Multifamily Markets

Investors, for the most part, have been relieved to see that the economic impact from COVID-19 thus far has not been as severe as many initially feared. Overall, multifamily investments have a long proven history of being one of the most resilient and stable investment options, which is one of several reason I selected this asset for my business. According to Yardi Matrix most recent publication, “COVID-19: A Game Changer for Multifamily", nationally, rents have dropped by 0.4% since the arrival of COVID, supporting even further the steadiness of apartment investing.

This week I am focusing on some key areas of data: which markets have seen the largest increases and decreases to rents during the onset months of COVID-19, as well as the current unemployment rates and demand for apartments within those respective markets. Factors such as employment and demand are two key components to take into consideration when evaluating which markets to invest in, as well as several other factors.

What’s most interesting about this current trend is the markets with less demand for multifamily housing display a more direct and severe impact, which is why you are more likely to see operators being forced to lower rents. The best markets must have a strong demand for multifamily housing to be successful, particularly if your strategy is value-add, in which the overall goal is to ultimately increase the profitability of the investment.

This type of data is critical to evaluate when you're considering investing in a market, and even more so, if you have current investments in the region. Remaining vigilant of market conditions can allow you to modify your strategy, and adjust to ensure you can still achieve your overall investment goal even in challenging circumstances.

The 5 Least Impacted Markets:

5. Omaha, Nebraska

· 2-Month Rent Change Post C19: +0.8%

· Current Unemployment Rate: 6.5%

· Percentage of Renters: 40%

4. Huntsville, Alabama

· 2-Month Rent Change Post C19: +0.9%

· Current Unemployment Rate: 5.1%

· Percentage of Renters: 42%

3. Memphis, Tennessee

· 2-Month Rent Change Post C19: +1.3%

· Current Unemployment Rate: 7.2%

· Percentage of Renters: 42%

2. Mobile, Alabama

· 2-Month Rent Change Post C19: +1.3%

· Current Unemployment Rate: 12.6%

· Percentage of Renters: 44%

1. Portland, Maine

· 2-Month Rent Change Post C19: +1.7%

· Current Unemployment Rate: 10.2%

· Percentage of Renters: 55.7%

The 5 Most Impacted Markets:

5. Boston, Massachusetts

· 2-Month Rent Change Post C19: -1.5%

· Current Unemployment Rate: 16.3%

· Percentage of Renters: 51%

4. Nashville, Tennessee

· 2-Month Rent Change Post C19: -1.7%

· Current Unemployment Rate: 15.2%

· Percentage of Renters: 46%

3. San Jose, California

· 2-Month Rent Change Post C19: -1.7%

· Current Unemployment Rate: 5.0%

· Percentage of Renters: 26%

2. San Diego, California

· 2-Month Rent Change Post C19: -1.8%

· Current Unemployment Rate: 13.9%

· Percentage of Renters: 39%

1. Midland-Odessa, Texas

· 2-Month Rent Change Post C19: -8.6%

· Current Unemployment Rate: 12.4%

· Percentage of Renters: 30%

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About the Author

Ellie is the founder of Blue Lake Capital, a real estate company specialized in multifamily investing throughout the United States. At Blue Lake Capital, Ellie helps investors grow their wealth and achieve double-digit returns by investing alongside her in exclusive multifamily deals they usually don't have access to.

Ellie is the host of REady2Scale , a podcast that highlights honest, insightful, and thought-provoking discussions on the multiple approaches for successful real estate investing.

She started her career as a commercial real estate lawyer, leading real estate transactions for one of Israel’s leading development companies. Later, as a property manager for Israel’s largest energy company, she oversaw properties worth over $100MM. Additionally, Ellie is an experienced entrepreneur who helped build and scale companies by improving their business operations.

Ellie holds a Masters in Law from Bar-Ilan University in Israel and an MBA from MIT Sloan School of Management.

You can read more about Blue Lake Capital at www.bluelake-capital.com and learn more about Ellie at www.ellieperlman.com.

Sources:

Yardi Matrix

US Bureau of Labor Statistics

RentCafe.com