As the term recession appears throughout the news with the rising inflation and interest rates, many individuals feel on edge about what that means.
Multifamily real estate is an asset class in real estate that has the potential to thrive during an incoming recession along with storage units and mobile home parks.
The main reasons multifamily is labeled as recession-proof is because:
- There is a low inventory of affordable housing and an undersupply of apartments nationwide.
- With home prices being at an all-time high, there is a large increase in demand for apartments as families begin to downsize from residential homes
- Also with prices being so high, potential new home buyers opt to rent than embark on buying a house in a time of economic uncertainty
- Home prices being so high also turns potential new home buyers into renters
- Lack of new construction due to materials and labor shortages puts additional pressure on multifamily housing
Multifamily has a proven track record of providing high risk-adjusted returns and outperforming all other forms of commercial real estate sectors. To conclude, people always need a place to live and during a time of uncertainty and possible recession, tenants look to affordable housing in multifamily apartments as a safety.