Updated: Mar 7
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