1

Multifamily Economic and Market Commentary

Differences in Identifying Units in Small Multifamily Properties

The small multifamily property sector is defined as those properties with between 5-50 units. It is a sector that 

has long been a focus for affordable housing because it is generally regarded as having more affordable units. 

For example, according to CoStar, as of fourth quarter 2021, the average asking rent for a unit in an existing 

small multifamily property was $1,250, somewhat less expensive than the average $1,550 for a unit in a large, 

50+-unit multifamily property. Therefore, it is useful to ascertain how much of this stock exists now and how 

much new supply is underway to determine the future of this important affordable segment of multifamily rental 

housing.

Small Multifamily Even More Affordable in Certain Metros

While CoStar shows that the difference in the nationwide average monthly asking rent for small versus large 

multifamily apartments is about $300, the difference can be even larger in certain major metro areas. According 

to Moody’s Analytics CRE, San Diego appears to have one of the largest differences with an average monthly 

asking rent as of fourth quarter 2021 just over $2,500 in a large multifamily property, compared to just over 

$1,900 per month in a small multifamily property. As shown in the table below, the difference between asking 

rents in small and large multifamily properties in seven major multifamily markets can range anywhere between 

$500 and $600 a month. 

Small Multifamily:

(5–50-unit properties)

Large Multifamily:

(50+-unit properties)

Vacancy Rent Metro Vacancy Rent

4.0% $1,983 Los Angeles 6.0% $2,537

6.9% $2,587 San Francisco 6.0% $3,164

4.7% $1,627 Seattle 5.5% $2,197

2.8% $1,920 San Diego 3.6% $2,512

4.2% $1,475 Chicago 5.5% $1,982

5.2% $2,081 Oakland 6.2% $2,577

6.2% $2,235 Boston 6.5% $2,794

Asking Rent and Vacancy for Small vs. Large Multifamily Properties - Select Metros

Source: Moody’s Analytics CRE
2

Multifamily Economic and Market Commentary

Small Multifamily Estimates Vary Greatly

Clearly, these units are more affordable. Yet, identifying the number of units in small 5-50-unit multifamily 

properties is not a straightforward exercise. As shown in the table below, estimates of units in properties with 

5-50 units vary greatly depending on the source of data. The American Community Survey (ACS) reports the 

highest total with 13.7 million units, representing 69 percent of occupied rentals. The Rental Housing Finance 

Survey (RHFS) reports almost half that number, 7.5 million units, representing about 30 percent of units. And 

lastly, CoStar, Inc. (CoStar) reports the lowest total at 4.8 million small multifamily units, representing less 

than a quarter of all multifamily rentals. 

Why the discrepancy? The answer is simple: different approaches to the estimates. 

Source: CoStar Group, Rental Housing Finance Survey (2021) 

Note: Excludes Seniors, Student, Manufactured and Military Housing.

Year-over-Year Estimates of Units Segmented by Property Type

CoStar

American 

Community Survey 

(ACS)

Rental Housing 

Finance Survey 

(RHFS)

Small Multifamily (5-50 units) 

Number of Units 4.8 M 13.7 M 7.5 M

Large Multifamily (50+ units)

Number of Units 16.1M 6.1 M 17.4 M

Total 20.9 M 19.8 M 24.9 M

CoStar

American 

Community Survey 

(ACS)

Rental Housing 

Finance Survey 

(RHFS)

Small Multifamily (5-50-unit) 

Number of Properties 333,000 Not Available 451,000

Large Multifamily (50+-units)

Number of Properties 91,000 Not Available 74,000

Total 424,000 Not Available 525,000

Year-over-Year Estimates of Properties Segmented by Property Type

Source: CoStar Group, American Community Survey (2020), Rental Housing Finance Survey (2021) 

Note: Excludes Seniors, Student, Manufactured and Military Housing. ACS figures based on occupied units.
3

Multifamily Economic and Market Commentary

ACS Estimate Overstates Amount of 

Small Multifamily Units

The ACS is an annual survey of households 

that includes questions about the units in 

which the renter survey respondents live. 

As shown in the adjacent excerpt from the 

ACS 2020 survey questionnaire, the 

household is asked to choose the number 

of units in the building in which they 

reside, not the total property. This leads to 

an overstatement of the number of units in 

small multifamily properties under the 

ACS. 

That’s because many multifamily 

properties outside of core urban areas are 

garden-style multifamily properties that 

have a set number of units located 

throughout several buildings on the 

property. For instance, a multifamily 

garden-style property that has 10 

buildings, each with six units has a total of 

60 units and is a large multifamily 

property. However, the survey response to 

the ACS questionnaire would show only six 

units per building, thereby adding each of 

the 10 buildings separately into its 5-50-

unit multifamily category. 

Excerpt from the 2020 American Community Survey 

Questionnaire 

Rental Housing Finance Survey Focuses on Property Level

The RHFS occurs once every three years and includes both single-family and multifamily rental properties with at 

least one housing unit intended for rent. The key aspect of the survey is that it focuses on the financing of rental 

housing properties, with emphasis on new mortgages, refinanced mortgages, or similar devices, such as deeds of 

trust or land contracts, and the characteristics of debt originations. As part of the survey, the RHFS also collects 

physical characteristics for the property. As a result, it is an improvement over the ACS for assessing the small 

multifamily sector because the survey is at the property level, meaning that the property and its total unit count 

are linked together. 

Source: American Community Survey (2020)
4

Multifamily Economic and Market Commentary

Excerpt from the 2021 Residential Housing Finance Survey

However, as shown in the excerpt from the questionnaire, condos that are rented may be included in the 

response, which, in turn, may also lead to an overstatement of the number of units available at small 

multifamily rental properties. In addition, the instrument is still a survey reliant on a sample. As a result, 

variation in the weighting of responses may affect the total number of units.

CoStar Verifies Properties and Units 

CoStar’s data is also collected at the property level. However, CoStar has a fleet of inspectors that physically 

verify the existence of the multifamily properties and their corresponding units in its database. Furthermore, 

its multifamily database coverage is nationwide with researchers located in several metro areas in each 

state. 

As a result, we believe that the CoStar data on small multifamily properties has been physically verified and it 

is very likely that there are at least 4.8 million rental units in small multifamily properties across the country.

Based on CoStar data, the 4.8 million units in small multifamily properties represent just under a quarter of 

the nation’s multifamily rental housing stock. However, according to the Dodge Data & Analytics Supply 

Track construction pipeline, which physically verifies properties under construction, there is quite a 

divergence between small and large multifamily properties regarding new units being constructed.

Source: Residential Housing Finance Survey
55

Multifamily Economic and Market Commentary

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Large Multifamily

Small Multifamily

Share of New Small vs Large Multifamily Properties Completed 

(2013-2021)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Large Multifamily

Small Multifamily

Share of New Small vs Large Multifamily Units Completed 

(2013-2021)

Share of New Small 5-50-Unit 

Properties Limited

As shown on the upper chart to the 

right, data from Dodge Data & Analytics 

indicates that the share of small 

multifamily properties completed has 

largely kept pace with the share of large 

multifamily properties completed over 

the past nine years, averaging about 46 

percent of new properties completed.

In 2021, approximately 1,800 properties, 

representing 49 percent of new 

properties completed, were small 

multifamily properties with 5-50 units.

However, as shown on the lower 

adjacent chart, the share of units 

completed in small multifamily 

properties over the past nine years is 

much lower and only represents about 

10 percent of new units completed 

annually. For instance, in 2021 only 

about 38,000 new units were completed 

in small multifamily properties, 

resulting in an average property size of 

only 21 units.

In contrast, the Dodge Data & Analytics 

Supply Track construction pipeline data 

recorded an average property size of 

188 units for new large multifamily 

properties with more than 50 units. 

As a result, the number of units in large 

multifamily buildings is growing far 

more quickly than in small multifamily 

units. 

Source: Dodge Data & Analytics Supply Track 

Note: Excludes properties with missing units or fewer than 5 units and 

Condos/Townhomes
66

Multifamily Economic and Market Commentary

Fewer Units Added to Multifamily Inventory by Small Multifamily Construction

As shown below, small and large multifamily property types have not been far apart on the number of properties 

added to multifamily stock. Since 2013, small multifamily added about 13,000 properties cumulatively and large 

multifamily added just under 15,000 properties. 

However, new small multifamily properties have added a limited number of units to multifamily stock over the 

past nine years, as shown in the bottom chart below. According to the Dodge Pipeline, just under 2.8 million units 

have been added in large multifamily properties compared to more than 280,000 units added in small multifamily 

properties since 2013. Should this trend continue, we believe the share of rental units in small multifamily 

properties relative to the overall multifamily market will likely decline.

0

1,500

3,000

4,500

6,000

7,500

9,000

10,500

12,000

13,500

15,000

Large Multifamily

Small Multifamily

Cumulative New Properties, Small Multifamily vs Large Multifamily (2013-2021) 

Cumulative New Units, Small Multifamily vs Large Multifamily (2013-2021) 

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

2013 2014 2015 2016 2017 2018 2019 2020 2021

Large Multifamily Small Multifamily

Source: Dodge Pipeline Note: Excludes properties with missing units or fewer than 5 units and Condos/Townhomes
77

Multifamily Economic and Market Commentary

Small Multifamily Share of Market Expected to Keep Declining

The construction of new multifamily rental properties is running well above the historic average, but the number 

of units being added to the nation’s rental housing stock is rising fastest in large multifamily properties with over 

50 units. With the small multifamily property segment adding so few new units, we believe it’s likely that the 

overall share of the small multifamily segment compared to the overall multifamily rental market will continue 

to decline from the approximate one-quarter of apartment stock it currently represents to just 20 percent over 

the next decade.

This may be exacerbated by the fact that the stock of small multifamily properties is aging. According to the 

RHFS, the mean year the newest building was constructed in a large multifamily property was 1986. By contrast, 

the mean year the newest building was constructed in a property with 5-24 units was 1965. As a result, small 

multifamily properties are at risk of either being purchased as value-add opportunities by multifamily investors 

or demolished to make way for a larger multifamily property occupying the same footprint. However, it is 

important to note that the increase of larger garden-style properties also helps provide much-needed rental 

housing in many places across the country. 

Small Multifamily Properties Demolished

Small multifamily properties tend to be much older than other multifamily properties. Even as new small 

multifamily properties are under construction, other small multifamily properties have been demolished. From 

2012 through mid-February 2022, CoStar estimates that just over 4,000 small multifamily properties have been 

demolished. It is possible that some of these were replaced with large multifamily buildings.

Location of Small Multifamily Properties Demolished Jan. 2012 – Feb. 15, 2022

Source: CoStar, Inc

Note excludes properties in Alaska and Hawaii. 
Multifamily Economic and Market Commentary

8

Tanya Zahalak

Economic and Strategic Research – Economist – Advisor

Multifamily Economics and Research

April 11, 2022

Opinions, analyses, estimates, forecasts, and other views of Fannie Mae’s Economic and 

Strategic Research (ESR) 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 

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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 ESR Group represent the views of that group as of the date 

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