Post-Covid, Multi-Family vs. Single Family

[Evan Bradley]

Are others persuaded by the argument, made by @Jason Hartman and others, that the pandemic will accelerate the trend of people moving away from high-density living in the biggest cities and into more single-family homes in the middle of the country where prices are cheaper and the risk of a virus spreading is lower? If so, does that mean multifamily housing is less attractive than single-family homes? It seems to me to be the case and suggests picking up single-family homes in the Midwest and South. Others? 

[Todd Dexheimer]

I haven't heard @Jason Hartman speak on it, but I would agree with the urban flight belief. I am a multifamily investor, so I tend to be biased toward multifamily. My thoughts, however, are that we will see urban core, especially high rise, struggle mightily with occupancy. 

Think about living in a downtown high rise on the 50th floor. You rented here because it was close to your job, bars, restaurants, nightlife, shopping, etc. It also had a pool, gym and other cool amenities. Now COVID happens and you're stuck in your 600 sqft apartment. No amenities - they're shut down, no bars, restaurants, etc. You also have to walk down the hallways and take the elevator, but are stuck being too close to people. 

Your parents are able to enjoy their backyard, swim in their pool and stretch their legs in their suburban home. Your friends that moved to a suburban apartment aren't loving it, but they can go for a walk in the park nearby and go outside to get some vitamin D. 

People remember the last major event that happened. A lot of renters decided to not buy a house or delay, due to the events of the great recession. That's distant memory. Now they will make decisions due to the events of COVID.

I have had a conversation with several single family Realtors and some have mentioned getting calls from younger people looking to move out of their downtown apartment, into their first home. I think that trend continues. 

Single family get's a major boost, suburban apartments, especially townhome style with green space, will do just fine.

Now, here is the one thing that could derail this: Foreclosures. 

If foreclosures happen in large swaths (something I don't expect), then that will shift the thinking away from single family purchasing, back to renting. In this case suburban apartments will flourish.