March 25, 2022
Joe Fairless

What Multifamily Growth in 2021 Means for 2022

While the pandemic has changed the market for many cities across the U.S., it is clear there are a few front runners that have rebounded quickly or stayed immune to its effects. Despite the challenges some markets have faced, we are seeing an overall upward trend for multifamily growth across the country.

Multifamily weathered the 2020 recession better than most real estate sectors and market deterioration was far less than in previous recessions. According to Freddie Mac, across the U.S., rent is forecasted to increase by 3.6% in 2022. This increase in income does bode well for multifamily investors. Market demand in 2021 has already increased compared to the 2020 demand level and it will continue to rise. Here is a look at the multifamily growth rate in 2021 of metropolitan cities across the U.S.

New York City

Due to COVID-19 in the U.S., the New York City multifamily market continued to experience low transactions. According to the APA, the influx of residents to NYC is twice what it was in 2019. Analysis has shown a 42% increase in multifamily transactions, an 83% increase in building volume, and a 10% increase in dollar volume from Q3 2020 to Q3 2021. These attributes make NYC a desirable market for many investors.

Los Angeles

Los Angeles proved to be anything but immune in a year of national distress as recovery continues at a relatively steady pace. As of September 2021, rents appreciated 1.1%, and rates increased by 7.2%. Almost 28,000+ units are under construction, and 83% are aimed at high-income renters. Meanwhile, investment sales amounted to nearly $2.8 billion year-to-date, doubling 2020’s sales volume.


Chicago recorded an 8% increase in deal flows for 2021, which is one of the highest gains among metros in the Midwest. However, rents fell 3.3% and vacancies rose to 5.9%. These changes could make some investors wary of the market in Chicago, but forecasts are predicting an influx of new residents will drive up demand and rental prices in the Chicago metro.


The Dallas multifamily market continued its upward trajectory due to its robust economy. Rates increased by 1.8%. The second quarter of 2021 saw 8,000+ multifamily units sold and more than 7,000 units in the third quarter. A total of 22,000+ multifamily units were delivered in 2021.


Houston saw meaningful progress in 2021, with rising oil prices and improving overall economic conditions supporting the multifamily market. Rents have been increased by 1.3%. Despite the busts of the past decades, investors and developers are confident in the metro’s longer-term potential. In 2021, $6.8 billion in multifamily assets changed hands across the greater Houston area, and 15,000+ units came online.

Washington, D.C.

Washington, D.C. has faced several challenges over the past year, so it will likely take some time to recover. Multifamily transactions through May 2021 were a total of $1.6 billion, a slight decrease compared to the same period in 2020.  Class B year-over-year rent growth was 14.5%, which was on pace with Class A at 15%. Class B vacancies decreased 190 basis points to 2.4%.


Miami’s market was overperforming in 2021, largely due to accelerated demand generated by incoming residents. This demand has maintained rent growth by 2.8% and pushes the average overall rent to $1,992. Multifamily investment also overperformed with $4.2 billion in deals recorded through August. Development is also up with almost 40,000 units underway and an additional 215,000 apartments in the planning.


As compared to 2020, multifamily transactions rapidly increased in Atlanta last year. Almost 240 transactions were made for a total of $12 billion. A 50% increase in sales velocity was seen from the first quarter to the second quarter of 2021. Overall activity level doubled the pace recorded in 2020. The number of sales recorded in the first quarter of 2021 is equal to the total sales of 2020. With activity accelerating, prices are on the rise as well. The median price was approximately $156,000 per unit, more than 18% of the median price in 2020. The cap rate is almost 4%, but it could continue to compress as the pace of rent growth gains momentum.

About the Author:

Veena Jetti is the founding partner of Vive Funds, a unique commercial real estate firm that specializes in curating conservative opportunities for investors.

Disclaimer: The views and opinions expressed in this blog post are provided for informational purposes only, and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action.

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