Small Multifamily Investment Snapshot — Q1 2021

Small multifamily lending volume reached $15.1 billion during the first quarter of 2021, an annualized pace of $60.2 billion, which would be a 6.6% increase over 2020’s total. Total originations not only surpassed 2020’s total, but also 2019’s pre-COVID peak.

Cap rates for small multifamily transactions averaged 5.3% during the quarter, down 2 basis points (bps) from the end of 2020, and 34 bps year over year. Small multifamily cap rates have been compressing at an average of 20 bps annually since 2011. Small multifamily loan-to-value ratios (LTVs) averaged 65.9%, up 66 bps from the end of 2020, steadily rising to levels not seen seen since mid-2014. Debt yields fell to 8.1%, nearing pre-COVID levels.

Here’s a quick look at the Q1 2021 small multifamily investment benchmarks.

For more insights on the small multifamily market, view our Q1 2021 Small Multifamily Investment Trends Report and our Arbor Chatter blog.