Q2 Multifamily Demand Falls Due to COVID-19 Economic Downturn
- Usually the strongest quarter of the year for multifamily demand, Q2 net absorption fell to just 21,100 units—the lowest Q2 level since 2009.
- The vacancy rate rose by 30 basis points (bps) quarter-over-quarter to 4.6% and average monthly rent fell by 1.4% to $1,720.
- Despite the low level of absorption, the multifamily market held up better than expected in Q2. Given the magnitude of the job losses, the rise in vacancy and drop in rents was relatively modest, as federal and state stimulus programs, including enhanced unemployment benefits, helped financially stressed apartment residents make their rent payments.
- Market fundamentals likely will be under increased pressure in H2 2020 from continued high unemployment and less demand. The market should stabilize by Q1 2021 and show steady improvement after that.