In late January, LightNOW posted about signs of trouble ahead for the Multifamily real estate market. There are now indications that trouble has arrived. Apartment loans at least 30 days past due or in non-accrual have jumped 81%.
Banks are increasingly taking losses on apartment loans. This will likely lead to distressed selling, as well as buying opportunities for brave investors. In Q4 2023, multifamily loans at least 30 days past due or in non-acrual status rose to $3.6 Billion, a 43% increase from Q3 2023, and an 81% spike year over year. The figures are from S&P Global Market Intelligence.
Loan Loss Rate For Apartments:
- 2020: 12% (when COVID-19 hit)
- 2021: 6%
- 2022: 5%
- 2023: 16%
*Data from MSCI.
Things were much worse, however, during and after the Great Recession. The 2009 loan loss rate was 37%, and in 2011 35%. More information is available here
