American multifamily homes - statistics & facts
Multifamily is one of the most important property types in the U.S. real estate investment market. In 2024, it was responsible for more than one-third of commercial real estate investment, more than any other property type. That figure was even higher in 2021 when multifamily investment soared by almost 120 percent. The market has since softened amid an overall slowdown in the commercial property market. That has interrupted a decade-long period of continuous growth, as indicated by the CoStar Commercial Repeat-Sales Index (CCRSI) for multifamily real estate, signaling a correction in the sales prices of multifamily buildings.
The multifamily real estate market has experienced fluctuations, with a decline in the market starting in the second half of 2022 after a period of steady growth. Despite these fluctuations, multifamily remains the property sector with the highest investment prospects, according to experts.
What drives the growth of the multifamily sector?
The sector has enjoyed robust demand, as shown by the annual multifamily net absorption rate. Over the last decade, tenants occupied between 180,000 and 617,000 units more than they vacated. Though single-family housing remains a cornerstone of the American Dream, affordability due to the continuously soaring house prices and the dramatic increase in mortgage interest rates have led many prospective homeowners to resort to renting a multifamily unit instead of buying a single-family house. The construction of multifamily units has therefore been rising, underpinned by the growing demand and rental prices. Between 2020 and 2022, the number of building permits soared, indicating an increase in new supply coming to market.Mortgages and financing
The sector's growth would not be possible without rising debt originations to finance it. The favorable lending conditions in 2020 and 2021 allowed investors to access financing at record-low interest rates. As the monetary policy tightened in 2022, borrowers faced dramatically higher refinancing costs. Out of the 275 billion U.S. dollars in maturing multifamily debt in 2024, about 105 billion U.S. dollars were borrowed during the Pandemic Liquidity Bubble (2020 to 2021). Despite this wave of debt maturities, multifamily saw a lower delinquency rate than the average in the commercial real estate market.The multifamily real estate market has experienced fluctuations, with a decline in the market starting in the second half of 2022 after a period of steady growth. Despite these fluctuations, multifamily remains the property sector with the highest investment prospects, according to experts.
