Remember those record-setting apartment sales in 2019? COVID-19 made sure that there’d be no repeat performance this year.
According to the December report from Yardi Matrix, multifamily transaction activity has fallen sharply in 2020 thanks, of course, to the COVID-19 pandemic. Through the first three quarters of this year, $50.6 billion of multifamily property sales were completed in the United States. That seems like an impressive number but is actually down 41.7 percent from the $86.5 billion in multifamily sales reported during the same period a year ago, according to Yardi Matrix.
Last year was a record-setting one for the multifamily sector, with apartment property sales hitting $127.8 billion in 2019. Thanks to COVID, final multifamily sales in 2020 will come nowhere near this record-setting figure.
The slowdown in multifamily sales, though, has not been seen evenly across metropolitan areas, regions and property types. Gateway and coastal markets have typically seen a larger decline in deals than have secondary and tertiary markets, Yardi Matrix reports.
According to the company’s December report, investors moved from urban core areas to inner-ring suburbs and from primary to tertiary markets throughout 2020. And the immediate future? Yardi Matrix researchers say that sales will remain down for at least the early part of 2021. As the report says, until people can return to their normal daily activities after enough of the country is vaccinated, uncertainty will linger in the apartment market.
In some good news, Yardi Matrix said that in comparison to most other commercial real estate sectors, the multifamily market has held up well during the pandemic, with loan delinquencies in this segment remaining low.
The Midwest saw more than $4.2 billion in apartment property sales from January through September of this year. For all of 2019, the Midwest saw more than $9.2 billion of sales. Yardi Matrix said multifamily property sales for the first three quarters of the year in the Midwest were down 32.6 percent when compared to the first nine months of 2019.
Different Midwest cities, of course, have seen bigger drops than others. In the Minneapolis/St. Paul area, for instance, Yardi Matrix reported that apartment property sales had fallen 43.6 percent in the first three quarters of this year when compared to the same period in 2019. In Chicago, that drop is 49.5 percent.
In Columbus, apartment property sales were down 55.2 percent, while in Nashville they were off by a smaller 26.7 percent.