Multifamily Property Owners May Soon Face Major Issues

The Federal Reserve’s actions to curb inflation have significantly escalated mortgage costs for building owners. Some are struggling to fill units and generate sufficient income, while others face occupied apartments where rents cannot rise fast enough to cover increasing loan payments. According to CRED iQ data, nearly one in five multifamily loans is now at risk of delinquency. The oversupply of upscale apartments in major Sun Belt cities like Miami, Atlanta, Phoenix, and Austin has exacerbated this situation. Last year alone, these cities saw a surplus of 216,000 new apartment units, sharply contrasting with only 95,000 new renters. Despite these challenges, multifamily buildings generally maintain stronger financial resilience compared to offices and retail properties, largely due to accessible financing options from government-backed entities such as Fannie Mae and Freddie Mac, aimed at supporting affordable housing. 

Source: https://www.nytimes.com/2024/07/04/business/apartment-multifamily-loans-trouble.html