Small Multifamily Investment Snapshot — Q2 2021

The small multifamily recovery is well underway. The outlook looks positive for Q2 2021 small multifamily investment and for the year ahead. Macroeconomic tailwinds and the sunset of the CDC’s eviction moratorium will take the reins from the reliable underlying demand and the agencies’ (Fannie Mae and Freddie Mac) support that kept small multifamily going during the pandemic recession.

Annualized 2021 estimates of new lending volume on small multifamily loans are on pace to finish the year at $57.1 billion. The current estimate would represent a 0.5% annual decline, or a decrease of about $315 million from 2020.

National average cap rates for small multifamily properties continued their long-term trend of steady declines in the second quarter of 2021, shaving off 12 basis points (bps) from the previous quarter and settling at 5.2%. Small multifamily cap rates have, except briefly during the pandemic, compressed since 2011, falling an average of 21 bps annually.

Here’s a quick look at the Q2 2021 small multifamily investment benchmarks.

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