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Multifamily Market Commentary – September 2016 

Big Impact from Small Multifamily Properties

Multifamily rental units can be found in high-rise structures or in garden-style buildings, but there are a number of 

properties that house between just five and 50 housing units. These properties are usually identified as small 

multifamily and can be found in many different metros across the country. In many places, they can also be a key 

source of affordable rental units. 

How Many Small Multifamily Properties Are There? 

Identifying and estimating the nation’s total number of small multifamily properties can vary widely, as shown in the 

table below. Three third-party data vendors offer what appears to be the best available data on estimating these 

small multifamily properties: CoStar Group, Inc., CrediFi Corp., and CoreLogic, Inc., but all provide different 

estimated totals. That said, it seems that there are between 296,000 and 330,000 small multifamily properties.

CoStar Identifies Small Multifamily Properties

CoStar Group has an extensive property level multifamily database and estimates that there are 296,000 small 

multifamily properties with about 4.4 million units total. CoStar has the ability to acquire extremely detailed property 

level information based on a combination of public and private data sources, including daily electronic downloads. 

This advantage allows for a more detailed analysis and estimate of the nation’s existing small multifamily rental 

stock.

CrediFi Identifies Small Multifamily Funding Sources

CrediFi Corp., which tracks debt funding, states that it can confirm there are at least 102,000 small multifamily rental 

properties. However, based on property characteristics, CrediFi can expand that estimate to a larger 228,000 

additional small multifamily properties, bringing its estimated total to about 330,000 properties with 3.5 million units.

CoreLogic Identifies More Small Multifamily Properties but Fewer Units

Although CoreLogic has the highest estimate of 360,000 small multifamily properties, it estimates there are only 

about 2.3 million units. It should be noted that CoreLogic data is land parcel-based rather than property-based. 

Since a single multifamily property may potentially be made up of more than just one land parcel, this estimate likely 

overstates the actual number of small multifamily properties somewhat. CoreLogic estimates that it might be over 

by only 10 percent or less. In addition, CoreLogic’s unit count estimate includes only units that were identified in its 

database. 

Source Number of 

Properties Number of Units

The CoStar Group1 296,000 4.4 million

CrediFi - Confirmed 102,000 1.7 million

Credifi – Additional2 228,000 1.8 million

CrediFi - Confirmed + Additional 330,000 3.5 million

CoreLogic3 360,000 2.3 million

Sources: 

1

CoStar Group. 

2 

CrediFi Corp. Identified additional properties without unit counts as being likely small multifamily 

properties based on property characteristics.

3

CoreLogic, Inc. Estimate is based on land parcels and includes only data with unit counts reported.

Estimated Number of Small Multifamily Properties by Vendor
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Small Multifamily Everywhere 

According to CoStar, small multifamily properties are highly concentrated, with the top 10 states containing almost 

three quarters of the stock - just under 215,000 properties, as of August 2016.

As shown on the map below, California and New York contain the most small multifamily properties. California leads 

with nearly 99,000 properties identified – that’s about one-third of the entire nation’s estimated small multifamily 

property stock. New York comes in a distant second with about 37,000 – about a 14 percent share. Illinois and 

Florida also have a significant number of multifamily properties, with about 14,000 each. 

The vast majority of states have far fewer properties. Just nine states have between 5,000 and 10,000 properties. 

Another 16 states, along with the District of Columbia, have between 1,500 and 5,000 properties and the remaining 

22 states have fewer than 1,500. Four states have fewer than 500 small multifamily properties: Montana, Delaware, 

Vermont, and Wyoming. 

Average Units Per Property Higher in Less Populous States

While there are some exceptions, in general, the lower the population density, the higher average number of units 

per property. For instance, Montana, Wyoming, and South Dakota each have 19 or more units on average per small 

multifamily rental property. In fact, North Dakota had the highest average number of units per property with 24 on 

an estimated 600 properties. 

While this trend may seem surprising at first, it makes sense. Small multifamily rental properties in these less 

populous states are usually found in the larger metropolitan areas and tend to be the predominant form of multifamily 

housing. There is also more, yet less expensive, land available in these metros than compared to many more 

expensive coastal metros, allowing for more units per property. By contrast, more densely-populated places, such 

as those in California or Florida, end up averaging just 13 or fewer units per small multifamily rental property. 

Estimated Number of Small Multifamily Properties by State

Source: CoStar Group. Map data excludes 

senior, student and corporate housing as well as 

proposed small multifamily properties. Includes 

subsidized affordable properties. Note: Alaska 

with fewer than 500 properties and Hawaii with 

fewer than 2000 not shown.
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Top Metros Usual Suspects for Small Multifamily

As might be expected from the state concentrations of small multifamily properties, the top five metros for small 

multifamily are largely located in California and New York, as shown in the table below. Los Angeles has the highest 

number of small multifamily properties by far with an estimated 51,100 properties resulting in a whopping 637,500 

units – about one quarter of the total number units in small multifamily properties. New York City follows a distant 

second with 30,800 properties and 498,500 units. 

The only metro in the top five outside of New York and California is Chicago with 12,800 properties and almost 

175,000 units. Four out of the top five average only 12 units per property while New York City averages 16 units 

per property.

Small Multifamily Lending – Alive and Well 

Based on CrediFi’s data for confirmed small multifamily rental properties, there were $88 billion in loan originations 

on 11,970 loans in 2015 resulting in an average loan balance of $7.3 million, as shown in the table below. 

However, taking into account property characteristics to identify small multifamily properties where no units were 

listed, CrediFi estimates that there may have been an additional $32 billion in loan originations on an additional 

11,464 loans. In this case, the total origination volume in 2015 may have been as high as $120 billion on an 

estimated 23,434 loans, bringing the average loan balance down to about $5.1 million. Through June 2016, CrediFi 

estimates that there may have been as much as $15.5 billion originated on 3,952 loans resulting in an average loan 

size of about $3.9 million.

Metro Area Number of Small 

Multifamily Properties

Number of Units Average Number of 

Units per Property

Los Angeles 51,100 637,500 12

New York City (five boroughs) 30,800 498,500 16

San Francisco-Oakland 15,100 176,600 12

Chicago 12,800 174,900 12

San Diego 9,900 111,500 12

Source: Number of 

Multifamily 

Properties

2015 

Number 

of Loans

2015 

Original 

UPB ($B)

2015 Avg. 

Loan Size 

($M)

YTD 2016 

Number of 

Loans

YTD 2016 

Original 

UPB ($B)

YTD 2016

Avg. Loan 

Size ($M)

CrediFi 

Confirmed 5-50

102,000 11,970 $88 $7.3 2,209 $13.1 $5.9

CrediFi 5-50 

Likely 5-50

228,000 11,464 $32 $2.8 1,743 $2.4 1.4

Total 330,000 23,434 $120 5.1 3,952 $15.5 3.9

Top Five Metros for Small Multifamily Properties – CoStar Estimates

Source: CoStar Group. Excludes senior, student and corporate housing as well as proposed small multifamily properties. Includes 

subsidized affordable properties. 

Loan Volumes on Small Multifamily Properties January 2015 – June 2016

Sources: CrediFi. Includes all types of financing including second liens. YTD = Year to date; Data through June 17, 2016 
© 2016 Fannie Mae. Trademarks of Fannie Mae. 9.19.16

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Increased Sales of Small Multifamily Properties

CoStar provides sales data and trends for small multifamily rental properties. As shown in the chart below, CoStar 

is reporting that sales of small multifamily properties have been climbing since 2009, with about $24 billion in sales 

in 2015, the last full year of sales data available. 

Interestingly, the percentage of sales volume financed with debt has remained relatively steady since 2011 with 

about half of all sales volume involving at least some amount of debt.

Another Busy Transaction Year Expected in 2016

According to CoStar, lenders financed an estimated $12.3 billion on 5,800 loans backed by small multifamily rental 

properties through the end of August 2016, with an average loan balance of about $2.1 million. This does not include 

student, seniors, or corporate property types nor does it include bulk portfolio sales. 

Many of the most active lenders were well-known multifamily lenders, with JP Morgan Chase, The Dime Savings 

Bank, Greystone, and Arbor among the top lenders through the first half of 2016. In fact, JP Morgan Chase led in 

lending for small multifamily properties.

Other smaller, less well-known lenders were also quite active, including Portland, Oregon-based Umpqua Bank, 

New Jersey-based Peapack-Gladstone Bank, and Luther-Burbank Savings Bank, headquartered in Santa Rosa, 

California.

Some Average Loan Balances are Quite High 

While the average balance for most small multifamily rental property loans was well under $5 million, a few lenders 

had significantly higher loan balances. For instance, the average small multifamily rental property loan balance for 

New York Community Bank was $10.5 million, for Capital One Bank it was $11.4 million, and for Virginia-based 

Eastern Bank, it was $13.5 million.

0%

10%

20%

30%

40%

50%

60%

70%

80%

$0

$5

$10

$15

$20

$25

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Small MF Sales Small MF Loan Volume Percentage of Sales

Small Multifamily Rental Property Sales and Loan Origination Volume – CoStar Data 

Source: CoStar Group, based on sales of existing small multifamily properties, excludes refinancing activity and portfolio sales. Note: 

Excludes Corporate, Student and Senior housing, includes Subsidized Affordable
© 2016 Fannie Mae. Trademarks of Fannie Mae. 9.19.16

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Private Lenders and Individuals Also Active 

Surprisingly, private lenders and private individuals (likely high-net worth individuals) have also been active small 

multifamily rental property lenders. In fact, according to data from CoStar, private individuals were the second most 

active lending source for this property type, providing nearly $700 million in liquidity this year through August alone. 

Together, the categories of Private Individual and Private Lender accounted for an estimated $1.3 billion in financing 

on small multifamily rental properties so far this year, totaling about 1,145 loans with a combined average loan 

balance of about $1.1 million.

Seller Financing Plays an Important Role

Another interesting observation is that seller financing also appears to play an important role. According to data 

from CoStar, while New York Community Bank was the fourth-largest lender by loan volume financing with an 

estimated $313 million on just 30 loans, the Seller Financing category placed fourth by loan count, with property 

sellers financing an estimated $311 million on 170 loans, with an average loan balance of just $1.8 million.

Based on this information, it seems that there is a variety of financing sources available in the financing of small 

multifamily rental properties, indicating there is sufficient and ongoing liquidity for this property type. 

Apartment Properties Growing Larger

According to data from the Dodge Data & Analytics Construction Pipeline, the number of new multifamily projects 

being started has been declining since peaking in second quarter 2015, falling to 678 projects during first quarter 

2016, as seen in the chart below. However, the average number of units rose, however, to about 117 units per 

project. This trend of maximizing square footage in multifamily development, rehabilitation, and renovation is not 

unsurprising, given the high land acquisition and construction costs in most metros. 

Unfortunately, it does have implications for the small multifamily segment, which in many places tends to offer more 

affordable rents when compared to newer properties. 

200

300

400

500

600

700

800

900

1000

1100

40

50

60

70

80

90

100

110

120

130

140

Number Projects Started

Avg. Units Per Project

Average Project Size

Number of Projects Started

Average Number of Units per Apartment Project Started

Source: Dodge Data & Analytics, June 2016
© 2016 Fannie Mae. Trademarks of Fannie Mae. 9.19.16

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Fewer Small Multifamily Properties in the Pipeline

As might be expected, with the average number of units per project rising, a much smaller percentage of new 

construction is for new units in projects with five to fifty units. In fact, as seen on the chart below, only ten percent 

to fifteen percent of new units are in properties with five to fifty units.

An Uncertain Future for Small Multifamily 

Over the next decade, the nation’s multifamily stock will likely see an influx of higher unit count properties. As older 

small multifamily rental properties age and/or fall into disrepair, they will likely be replaced with properties with more 

density per square foot. Developers will likely create more, but much smaller, units on the same size lot. As a result, 

these small multifamily properties may end up moving out of the 5-50 unit category and push up into the 50+ unit 

category, making preservation of the existing stock of small multifamily rental properties offering more affordable 

rents even more critical.

Tanya Zahalak

Senior Multifamily Economist

Multifamily Economics and Market Research

September 2016

Opinions, analyses, estimates, forecasts, and other views of Fannie Mae's Multifamily Economics and Market 

Research (MRG) group included in these materials should not be construed as indicating Fannie Mae's business 

prospects or expected results, are based on a number of assumptions, and are subject to change without notice. 

How this information affects Fannie Mae will depend on many factors. Although the MRG bases its opinions, 

analyses, estimates, forecasts, and other views on information it considers reliable, it does not guarantee that the 

information provided in these materials is accurate, current, or suitable for any particular purpose. Changes in the 

assumptions or the information underlying these views could produce materially different results. The analyses, 

opinions, estimates, forecasts, and other views published by the MRG represent the views of that group as of the 

date indicated and do not necessarily represent the views of Fannie Mae or its management.

0%

20%

40%

60%

80%

100%

2009 2010 2011 2012 2013 2014 2015 YTD 2016

50+ Unit Projects 5-50 Unit Projects

Distribution of Apartments in Completed Construction Projects

Source: CBRE-EA/Dodge Pipeline; YTD 2016 through October 15

NOTE: Pipeline data is not an actual forecast of activity, it is a monitor of activity reported on to-date. As more projects are planned and 

tracked, figures in future periods might go up.