The New Un-Normal in Multifamily

Multifamily Finance Absorbing the Impact of COVID, but More Jolts May Be Ahead

Janette O'Brien, VP, KeyBank Real Estate Capital's Multifamily Lending, September 2020

The New Un-Normal in Multifamily

Amidst the 2020 economic jolts, the mission to deliver more housing to more Americans remains paramount and more necessary than ever before. As a result, Fannie Mae and Freddie Mac are actively quoting, and lenders are originating and closing deals. To date, the multifamily sector is surprising the industry’s naysayers and continuing to outperform other property types in the face of the economic impacts of the COVID-19 pandemic. Key indicators for multifamily owners, including rent collection and tenant retention, have remained strong.

However, no sector of commercial real estate has been wholly unscathed by the pandemic-related shutdowns. Looking ahead, multifamily owners and lenders are facing uncertainty as the country climbs from record-high unemployment levels1 and a deep recession.

As part of the Mortgage Bankers’ Association (MBA) webinar in May 2020, “The New Un-Normal in Multifamily,” KeyBank Real Estate Capital’s Janette O’Brien, head of multifamily production, joined Greg Willett, chief economist for RealPage, and Jamie Woodwell, vice president of commercial/multifamily research, MBA, to discuss the state of the multifamily market and how it will be part of the country’s recovery. Now that the U.S. has surpassed six month since the pandemic’s onset, we observe how multifamily trends are evolving.

Multifamily Data Has Some Bright Spots Amid Turmoil

When stay-at-home orders forced businesses to shut down across the country, the American economy began a precipitous drop. Through the Coronavirus Aid, Relief and Economic Security (CARES) Act more than $2 trillion in relief was distributed, including through enhanced unemployment benefits and direct stimulus payments to households.This assistance may have helped sustain multifamily housing through the initial wave of the pandemic.

  • Renters are still staying put: Apartment retention rates reached record rates in April and continued to remain strong throughout the summer as many renters were unable or unwilling to move during the pandemic. According to data collected by RealPage, 53.3% of renters renews their leases in July – a time when renters typically move the most –the highest for the month on record1.
  • Collections have been solid: According to the National Multifamily Housing Council, “Americans are prioritizing rent, and the work apartment firms did to create flexible payment plans is paying dividends.” The agency found that 90.1 percent of apartment households paid rent as of September 202.
  • New leases and effective asking prices are causing concern: New lease signings, which had seen a precipitous 45% drop in March, began to rebound slowly over the summer. More concerning, however, August 2020 saw the deepest cuts in asking rents since March 2010 when the U.S. was coming out of the previous recession, according to data collected by RealPage3.

Multifamily Lending Pace Holds Steady

The lending side of the multifamily financing market remains busy, said O’Brien, but new loan requests are showing a slight slowdown. In particular, borrowers should take note that the incredible demand for affordable housing products that preceded the pandemic persists. Affordable and workforce housing as multifamily categories continue to be highly sought-after property types. Year to date, KeyBank has closed more than 170 multifamily deals with volume of $4.19 billon.

Fannie Mae and Freddie Mac are providing substantial liquidity to lenders during the COVID-19 response and supporting borrowers, notes O'Brien. Freddie Mac is increasing volume through its index lock and early-rate lock options, while Fannie Mae announced it will consider additional waivers on reserves for lower-leverage deals.

According to O'Brien, other subsectors of multifamily housing, including student housing and seniors housing, are both experiencing specific pandemic-related challenges. However she notes, "The door is not completely closed for the right borrower in student housing that has an established relationship with a university.” The start of the school year has brought some students back to many campuses across the country, improving the outlook. On the other hand, the agencies are holding on any seniors housing lending, which has borne the greatest brunt from the pandemic due to health concerns about the spread of disease within nursing homes and other senior care facilities.

No Sure Answers Ahead, but Multifamily Still Closing

As the United States comes back from the economic impacts of the COVID-19 pandemic, multifamily professionals are feeling more positive now than they did at the pandemic’s peak. Yet when they look forward, they face many unknowns.

Economists are currently predicting a “swoosh”-shaped recovery, which will take longer than the hoped-for V-shaped recovery.4 Bringing back the jobs lost during this downturn may take years, and future federal programs are unknown. As in previous recessions, renters’ appetite for Class A rent may decrease, and households may double up, further affecting the demand for multifamily and shifting some demand to lower-priced asset classes.

The real estate industry itself is learning how to keep relationships and deal volume robust without key conferences and in-person meetings. In a turbulent environment, having the right financial advisor that can provide strategy and deal execution is more important than ever.

To discuss this content and the economic impact on your property portfolios, call your KeyBank Mortgage Banker, or reach out directly to

This is designed to provide general information only and is not comprehensive nor is it legal, accounting, or tax advice. Banking products and services are offered by KeyBank N.A. Equal Housing Lender. All credit products are subject to collateral and/or credit approval, terms, conditions, and availability and subject to change. is a federally registered service mark of KeyCorp.

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