Before COVID-19 multifamily housing was on the rise. In fact, 2019 was the sixth year in a row where multifamily absorption has exceeded 250,000 units. It’s important to note that millennials make up a large portion of this multi-family housing demand. Multifamily housing ended 2019 strong, but what are the impacts from a global pandemic COVID-19?
COVID-19 marks an unprecedented time for not only the real estate market but for humanity. Many are working from home now and have become extremely conscious about maintaining a healthy lifestyle such as encouraging everyone to wash their hands, avoid large groups of people, and protect the elderly.
While all of those safe practices will definitely help to flatten the curve, you are still responsible for running your home builder or developer business. If you primarily build multifamily residences, then I encourage you to continue reading about how multifamily housing is impacted by this global virus.
Let’s face it – no one wants to be quarantined in a 500 square foot apartment. Even the most luxurious of multifamily properties had to limit their amenity usage for their residents. Not only will the demand for single-family homes increase, but the demand for changes in multifamily designs will also increase. Here are some changes to design preferences buyers want:
You will see more and more home builders and developer companies incorporate these design concepts in the years to come.
It’s an unfortunate truth that people are losing their jobs from COVID-19. In the two weeks following the national emergency declaration, 10 million individuals filed jobless claims. Since the multifamily sector forms the bedrock of the urban workforce, it was greatly impacted by job losses and the ability to pay rent. Let’s discuss further:
There is also the Coronavirus Aid, Relief, and Economic Security Act which provides an expansion of unemployment benefits to those who are not normally recipients. For small businesses, there is a loan and grant program to help maintain payrolls during this difficult time.
Did you know they’re actually long-term benefits for multifamily real estate investors? According to Globe Street, a team of real estate experts monitoring the market closely, there are many positives despite the future unknowns. Here is what they found in a recent study:
In addition to the data above, George Maravilla, the Senior Vice President of Tower Capital, shares that he is seeing lender participation is up from the recent shutdown. He notes that although it is slow, progress is being made and extensions are being approved.
COVID-19 has forced many home building and developer companies to prioritize technology spending more heavily than ever before. Much of the market is experiencing a shift from selling homes in person to now selling homes online.Here are more technology changes from COVID-19:
Pepper Contracting Services Inc is one of the many companies already taking advantage of AI’s features. For example, since they are already using AI to identify workers, they are using it to monitor groups as well. The AI company, Smartvid.io, dropped everything to fulfill this request. They added a new tag in their system to detect crowding as a social distancing software.
If I was an owner of a construction company, I too would consider incorporating these technological features into my business to protect my workers. As a home builder or developer, consider the costs and benefits for what advanced technology means for your business.
These four impacts for multifamily housing are only the tip of the COVID-19 impact iceberg. Expect to recognize even more impacts and shifts within the market as time passes. Do you have any questions about the multifamily sector being impacted by the pandemic? Ask your questions below in my comments.
About Terry Zelen
Creative Director | Consultant | Author | President of Zelen Communications
Terry Zelen is a seasoned Creative Director with more than 35 years of experience in Home Builder advertising and marketing.
He is the founder of The Punch List, which is an online blog to help inform home builders and developers on strategic marketing insights to fuel their firm.
Fill out the form below to subscribe for the The Punch List Newsletter. We'll send our latest news & industry insights, directly to your inbox.