For multifamily investors, the last six months have been a financial and emotional rollercoaster — and the subtitle of the recently released summer 2020 edition of Yardi Matrix’s U.S. Multifamily Outlook is an indication of the toll it has taken. The headline on the cover: Pandemic Ends Strong Run; Worst May Be Ahead. If the publication is to be believed, we have arrived at the top of that first lift hill, within seconds of plummeting down the other side.

In many respects, however, this gloomy scenario is the counterpoint of rosy V-shaped recovery predictions of the spring — and should be taken with the same large grain of salt. There is no questioning the data the report’s authors cite or even the overall trend they project. There are indeed difficult times ahead for multifamily. But the basic parameters of the crisis have not changed. The deep economic and societal pain we are feeling now was not hard to foresee in April. What has changed, now that we are nearly six months in and hardily tired of disruption, is how we are framing it.

Putting the Pain in Perspective

In fact, the report makes clear that although the economy and the industry have taken body blows — and that societal pain is real, extensive, and unequal, we have headed off catastrophe so far.

Here are the significant facts that the authors highlight:

Rents. Rents turned negative in the second quarter, declining 0.7%, for the first time since the global financial crisis. They are likely to drop further in the second half of 2020 before rebounding in 2021. These decreases are not evenly distributed. At the end of the first half, rents of luxury lifestyle units fell !.8% year-over-year while working-class renter-by-necessity units were up 1.4%.

Collections. Through mid-July, rent collection for professionally managed apartments was down only slightly from last year’s levels, though smaller apartment properties may be fairing less well.

Occupancy. Demand has weakened but not as much as many operators feared. Occupancy rates dropped 30 basis points nationally to 94.4 percent through May. New luxury units are taking longer to lease up, as demand is concentrated on less expensive product.

Supply. Deliveries for 2020 will be 250,000 units, down from initial projections of 320,000. With developers timing the expected rebound in economic growth, and banks reluctant to lend for construction, the supply of new units entering the market may drop further in 2021.

Transactions. Although property sales dropped precipitously in the second quarter, it was not for want of buyers. Most buyers, however, are looking for significant discounts, while many owners, looking back to the last recession, are convinced that valuations will rebound.

Capital Markets. Fannie Mae and Freddie Mac have been a stabilizing presence, ensuring liquidity in the segment. They securitized $50.8 billion in loans in the first half and are on track to meet their caps.

This Crisis Has an Expiration Date

A theme that runs through Yardi Matrix’s midyear report is that the impact of the crisis is uneven, affecting some areas of the country in different ways than others. For instance, not all regions seeing declines in rent growth are doing so for the same reason. In large coastal markets like New York, Los Angeles, and San Francisco, professionals fled to the suburbs. Other markets that have seen rent declines — Austin, Seattle, Miami, and Denver — witnessed an influx of units coming online just as demand softened.

There is no doubt that the economy and the multifamily market are under stress — and that the situation will worsen through the fall and winter. At the same time, thanks to the unprecedented investment in devising better treatments and vaccines, we should begin seeing the populace and the economy begin to heal in the first half of 2021. In that case, there is some comfort in realizing that we are approaching the halfway mark.