While most asset classes follow broader economic performance and are driven by higher levels of disposable income, money supply, and expansionary policy, the underlying demand fundamentals for multifamily real estate assets remain stable and insulated regardless of economic cycle.
In tougher economic climates, Class A and B+ renters may be forced to trade down to Class B/C multifamily assets. Specifically, in 2008 and 2009, occupancy levels in B and C multifamily assets declined by ~1.0–2.6% in each year. Ultimately, everyone needs a safe and comfortable community to live in during robust and weak economic cycles.
Multifamily properties have exhibited greater resiliency in maintaining asset values and has experienced lower volatility with market rents and occupancy levels relative to other property types. Property performance data for Class B and C apartments in Houston from 2008 to 2010 specifically exhibited a 2-3% standard deviation of annual occupancy change from 2003 through 2013.