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Multifamily Real Estate Investing Trends

While 2020’s economy has thrown curveballs left and right, the multifamily market has continued to grow in the wake of the pandemic. Recently, National Real Estate Investor published an interactive map showing how much each state’s multi-family market has brought in.  This information on multifamily property trends is vital for investors who may need multifamily bridge loans.

Here are the five states that are doing the most multi-family deals so far in 2020.

California (approx. $11 billion in multi-family investments)

California is the most populated state in the United States, so it only makes sense that it also has the highest volume of multi-family real estate sales. According to Encore Enterprises, this is mostly due to even more growth in some of California’s biggest cities such as Los Angeles, San Jose, San Francisco, Oakland, and San Diego. The Bay Area in particular has been the center of California’s population growth, and this growth has been the driving force behind the multifamily development California is seeing. However, as many major tech companies based in the Bay Area move to remote work, the demand for multifamily rental units in this area over the next 12 months bears watching.

Texas (approx. $9.7 billion in multi-family investments)

Yes, everything is bigger in Texas, but it is markets in key cities such as Dallas, Austin, and Houston that have kept multi-family units selling in the Lone Star state. The population growth in markets of all size, along with lower rent costs, have kept the market booming, especially in Dallas/Fort Worth.  Although these cities have taken an economic hit that hasn’t spared the multi-family market during COVID-19, CBRE expects the markets to stabilize in late 2020 and resume growth by early 2021.

Florida (approx. $8.3 billion in multi-family investments)

While Tampa does have a role in Florida’s multi-family market, Miami is the largest city for multi-family investments. 2019 was a great year for Miami’s market, but because of the toll COVID-19 has taken, the markets have slipped in the last few months.  According to Multi-Housing News, Florida’s overall economy will probably take a hit until the pandemic is under control because of its dependence on tourism. Hopefully by late 2020 or early 2021, Florida’s multifamily market will begin to see some improvement. Still, the market in large cities like Jacksonville that aren’t as dependent on tourism will keep the overall market afloat.

New York (approx. $4.8 billion in multi-family investments)

New York’s multi-family market is propped up almost entirely by New York City. While there are obviously other big cities in New York, none provide even close to as many apartments as the Big Apple does. COVID-19 has had a significant impact on New York’s apartments (many people were evicted), PropertyShark found that the New York City multifamily sales volume increased by 39% in the first quarter of 2020, so the start of the pandemic did not slow their market down too significantly. Again, this bears watching over the next few months—but volatility may lead to some purchase opportunities.

Georgia (approx. $3.4 billion in multi-family investments)

Atlanta holds the majority of Georgia’s multi-family market. Although the pandemic has obviously impacted the market some because of lower employment rates, the city still seems to be growing steadily. In fact, RealtyMogul cites Atlanta as one of the top markets for multifamily performance in 2020.

Conclusion

While some of these states have noticed a drop in their multi-family market over the last few months, economists are confident that this is normal given the pandemic and seems hopeful that the next few months will bring about an economic upturn. These states have already shown success in maintaining their market during a pandemic, so there is no doubt that they and many others will continue to flourish in the coming months.

This means that multifamily investors can look for opportunities to purchase properties or complete value-add rehabs to upgrade properties in areas with strong rent rates. They can use Lima One’s multifamily bridge loans to secure financing while maintaining maximum flexibility as the market continues to evolve.

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