The Winners and Losers in Multifamily’s Post-Covid Reset

From Crisis to Reset

When Covid first hit in 2020, most of us thought the turbulence would be temporary. Fast forward five years, and real estate has experienced one of the most dramatic cycles in modern history. From record-low interest rates and bidding wars to frozen transactions and refinancing cliffs, investors have had to adapt quickly. This week’s newsletter breaks down the four distinct stages of this wild ride.

Stage 1: The Pandemic Shock and Urban Flight

Lockdowns and remote work triggered a mass migration. Families left dense city cores in search of space and affordability, fueling a surge in suburban and exurban housing demand. Apartments downtown struggled, while suburban multifamily proved surprisingly resilient.

Stage 2: The Great Appreciation (2021–2022)

Fueled by sub-3% mortgage rates, apartment prices soared 20%+ nationally. Institutional capital poured into multifamily, driving cap rates to record lows.

Incredible rent growth occurred simultaneously in the Sun Belt metros—Austin, Phoenix, Tampa, Raleigh- and those areas recorded the biggest gains in values. Midwest markets only saw average rent growth at the time of 3% per year.

Stage 3: The Rate Shock (2022–2023)

Then came the whiplash. Inflation surged, the Fed hiked aggressively, and multifamily borrowing costs doubled. Deal volume collapsed, prices declined, and operators with short-term debt faced painful refinancing cliffs.

The Sun Belt, once red-hot, cooled as in-migration and ultra-low rates had fueled an oversupply of Class A apartments. Rents plateaued or even declined. By contrast, Midwest markets also absorbed higher rates but avoided negative rent growth—posting steady increases of 2–3%.

Stage 4: The Bifurcated Market (2024-Today)

Multifamily performance has split sharply by geography and debt strategy. In the Sun Belt, metros like Austin and Phoenix have seen significant declines in rents, with concessions making a comeback. These areas have remained the strongest performers over the last five years; however, the rent growth and interest rate fluctuations have taken a toll on many 2021 and 2022 investments.

By contrast, Midwest rents have remained steadily growing. Deal volume in these areas is higher, as the consistency makes these markets easier to underwrite compared to Sun Belt metros still searching for price equilibrium.

Properties acquired at the 2021–2022 peak often look expensive relative to today’s pricing. Ultimately, outcomes have hinged on debt structure: sponsors with floating, short-term loans are under real strain, while those who locked in long-term, fixed-rate financing are navigating today’s market far more comfortably.

Final Thoughts

Property values remain below their 2021–2022 peaks, creating opportunities to acquire quality assets at more attractive entry points.

While work-from-home momentum has eased, suburban demand continues to outpace urban. Investors who once relied on short-term, floating-rate debt have shifted strategies, with today’s environment favoring long-term, fixed-rate financing.

With interest rates already elevated and inflation largely subdued, today’s buyers have the advantage of discounted prices now and the prospect of more favorable debt terms ahead.

-Ben Michel

Ben Michel is the founder of Ridgeview Property Group, an investment firm specializing in multifamily real estate. Register Here to be notified of available investment opportunities.