Multifamily Lessons Learned From GFC 2020

March 28, 2021

Although the year 2020 delivered a tremendous blow to the multifamily market, this is not the first time the United States felt the sting of a global financial crisis. From the great depression between 1929 and 1933, and on to the next troubles our nation has endured throughout the years the most important thing that all of these crises have in common is that we bounced back from them.

The more recent GFCs have been the Coronavirus pandemic, and the 2008 economic crash that sent the United States into a tailspin of lost value and gigantic corporate bailouts. If there is ever any good that can come out of circumstances such as these, it is most definitely that the people who deal with such crises learn how to prepare for the next ones, and how to bounce back after they happen.

Recessions and Property Values

Between the second quarter of 2008 and the second quarter of 2009 the loss of value of properties from peak to trough was 24.7%.

The length of the decline lasted for about a year from the second quarter of 2008 to the second quarter of 2009. This means that the numbers continued to decline for a whole year before they began to rise again.

The recovery of the recession took a total of 8 quarters before the situation began to level out again. The fourth quarter of 2009 was the beginning of the healing phase, and up to the fourth quarter of 2011 before the finances were not considered a crisis anymore.

  • Multifamily institutional assets lost value and failed for six consecutive quarters.
  • It took eight quarters for the values to reach pre recession peak.
  • Primary markets took longer to recover than secondary markets.
  • COVID 19 recession and recovery period differed from the 2008 catastrophe.
  • CBRE forecasted that the rent will bottom out for multifamilies in Q1 2021 but fully recover by Q3 2023.

Property Values Fall and Job Losses Rise

The percentage of people that are employed and bringing in an income has a large impact on the cost of rent in the multifamily market. In 2008 a tremendous amount of people lost their jobs. As the employment percentage dropped, the value of property dropped right alongside it.

In 2010 the employment loss rate bottomed out at the first quarter one quarter after NCREIF index values reached a low trough in Q4 2009.

Multifamily Values Resilient Recovery Periods Vary

In a manner of speaking, the retail market did not come back as quickly as the multifamily market did. However, between the third quarter of 2009 and the 4th quarter of 2009 retal only dropped an index value of 16.6%, where multifamily dropped 24.7%.

It took a total of 8 quarters for the multifamily market to get back into the game, where it took 7 quarters for retail to snap back.

  • Multifamily dropped 24.7%
  • Industrial dropped 24.4%
  • Office dropped 26.8%
  • Retail dropped 16.6%
  • Hotel dropped 29.4%

The recovery periods for these markets were as:

  • Multifamily 8 quarters
  • Industrial 10 quarters
  • Office 12 quarters
  • Retail 7 quarters
  • Hotel 15 quarters

Garden Properties vs. High Rise

Garden properties are apartment complexes that are designed in an outdoor platform where there is grass around the property and an outdoor parking lot in many cases. High rise apartment complexes are built in cities and rise above the metropolis. Parking for high rises is usually an indoor garage where on-site storage bins can be added for extra security and privacy.

The index value for garden properties during the economic crash in 2008-2010 dropped 22.2%, where the high rise value dropped 29.2%.

Where garden properties took 6 quarters to fully recover, the high rise spectrum took 9 quarters.

It is evident that the garden properties had a stronger comeback than the high-rise multifamily market.

Comparing Employment Cycles of GFC and COVID 19

Although the employment index dropped approximately 15 points lower during COVID than it did during the GFC, the recovery rate for employment is expected to recover in half of the time that it took in 2010. Where the GFC took six years for jobs to fully recover, COVID 19 is expected to fully recover in less than 3 years total.

The experience from the GFC gave knowledge to the people that were battling the COVID pandemic and was able to veer the financial path back towards the normal numbers in record time.

Comparing Cost of Rent Recovery from GFC and COVID 19 Pandemic

Multifamily rents continued to decline throughout the first quarter of 2021, however CBRE predicts that rent will be back to pre-Covid levels by the first quarter of 2021.

The last economic breakdown that the United States had took 13 quarters to return to the levels they were at before the recession hit.

Compared to the GFC, the pandemic was much more devastating, but took less than half of the time to begin to recover.


The GFC taught the nation how to prepare for a catastrophic economic disintegration. Although nobody can actually see the future, market experts can determine what the future might look like if certain events take place, and how to maneuver opportunities that can make these events actualize.

The second quarter of 2021 has been an explosive success that is continuing to climb. The future of the multifamily market looks brighter than ever. Now could be a great time to invest.