According to the latest report from Yardi Matrix, the multifamily industry may feel the impact of the domestic spread of COVID-19, although the majority of the rental housing industry remains well capitalized and strong enough to weather a modest slowdown.
The global spread of the COVID-19 virus has brought a technical end to the 11-year bull market in equities, forced a European travel ban and sent Treasury rates to historic lows. The virus’ rapid spread has led to major disruption in airline traffic, conference schedules and cultural activities, including sporting events and festivals.
But what impact will the current shock have on the multifamily industry?
”Short term, owners and operators may face rent collection issues from tenants who have either fallen ill or lost their jobs, and some flexibility with impacted tenants may be required,” said in the report. ”From an investment perspective, however, most real estate portfolios remain well balanced and not over leveraged.”
Yardi Matrix expects the impacts of coronavirus to last three to six months, before a steady recovery boosts the economy once again. ”Given the short-term nature we anticipate, this could offer an investment opportunity for owners with ample cash available.Borrowing rates remain at all-time lows and financial institutions are well capitalized, marking a significant difference between the current shock and the 2008 financial crisis.”