Is Multifamily Truly Recession Resistant?

[Ryan Daigle]

"The asset class is known for its survival during a downturn, but with so much class-A product on the market, will its reputation hold?"

Looks like we're about to find out!

I actually think this upcoming recession will be somewhat unique (aren't they all?) in that the effects of COVID-19 will hit the C-class assets much harder since most white collar workers are more insulated from this shutdown. So tenants in C-class properties may not have anywhere else to go, but that doesn't mean they're going to be able to pay. Whereas the folks in the A-class assets will weather the storm much better and not need to step down at all.

Obviously speculation, but will be interesting to see what stats of this recession compared to others when we have them.

[Charles Seaman]

@Ryan Daigle and @Spencer Gray I think that both of you make good points under normal circumstances.  However, this recession will be far from normal.  It's the first time in the history of our country that a fully government created and government forced recession will occur.  The government has ordered many people to stop working by virtue of them shutting down so many public places.  The government is going to allow deferred rent payments and deferred evictions because of the scenario.  The government is basically giving said people an allowance through quantitative easing because of such.

Long story short is that the government is in COMPLETE control of this one and the rules are very different than they've ever been in the past.  With the rules that are temporarily in place, I don't believe that any property is truly recession resistant because the government has found a way to make the best recession resistant asset in the history of the world very vulnerable.