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Multifamily Economic and Market Commentary

May 2021

Assessing the Market Rate Affordable Multifamily Sector

In setting the 2021 multifamily loan purchase caps for the GSEs at $70 million each, FHFA required that 50 percent 

of the units acquired by Fannie Mae be used for “mission-driven” affordable housing, defined as units whose rents 

are affordable to tenants at or below 80 percent of area median income (AMI). Fannie Mae also defines affordability 

by incorporating the U.S. Department of Housing and Urban Development (HUD) standard; namely, an apartment is 

affordable if a potential renter household would not have to pay more than 30 percent of its household income on 

rent and utilities. There are several categories of mission-driven housing, but this piece addresses the nationwide 

scope of market-rate affordable units, meaning they are not subject to a government-based affordability 

requirement such as a regulatory agreement, recorded use restriction, or federal assistance program. Market-rate 

affordable units are generally affordable for a variety of reasons, such as being in older properties or in less 

expensive locations. 

Using Fannie Mae housing goals methodology, Fannie Mae partnered with third-party commercial real estate data 

firm CoStar, Inc., to identify the estimated universe of market rate apartment properties affordable to low-income 

renters, defined as those households earning at or below 80 percent of their local AMI. This allowed for an 

examination of the overall market rate affordable multifamily sector. It also provided the means to estimate Fannie 

Mae’s share of this critical sector. 

A Sizeable Number of Market Rate Affordable Properties/Apartments Exist in the U.S.

Applying Fannie Mae’s housing goals methodology to the CoStar database of apartment properties shows that 

there are just over 8 million market rate affordable multifamily units nationally, as shown in the chart below. These 

units are in approximately 111,000 properties nationwide. A total of 59 percent of the units are in the nation’s 50 

major multifamily metros, with the remaining 41 percent located elsewhere and usually in smaller properties. 

These market rate affordable multifamily units represent about 60 percent of the more than 14 million apartments 

for which CoStar had current market rents as of fourth quarter 2020, excluding special housing segments such as 

student and seniors housing. 

Estimated Distribution of Units by Market Rate Affordability Level – 4Q2020

Source Data: CoStar

0%

10%

20%

30%

40%

50%

60%

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

Very Low Income

(31%-50% of AMI)

Low Income

(51%-80% of AMI)

Moderate Income (1)

(81%-100% of AMI)

Moderate Income (2)

(101%-120% of AMI)

Not Low Income

(>120% of AMI)

Share of Apartment Market

Number of Apartments (millions)

Number Share

Note: Excludes U.S. Census bureau designated Outlying Areas which tend to have few apartments. 
Multifamily Economic and Market Commentary

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Higher-Income Renters Can – and Do – Displace Lower-Income Renters

As shown in the chart on the previous page, just under 11 percent of market rate apartments are only 

affordable to higher-income renter households – those earning over 120 percent of the AMI for their location. 

However, there is a mismatch, as CoStar data shows that just over 20 percent of all renter households fall into 

this higher-income category. In addition, for a variety of reasons, including the desire to save money, a higherincome renter household may rent an apartment affordable far below its means, thereby making the apartment 

unavailable to a lower-income renter household. This leads to a cascade effect and many displaced lowerincome renter households spend more than they can afford on rent. In fact, in 2019, approximately one-quarter 

of renters were severely cost-burdened, indicating they were spending over half of their household income on 

rent and utilities. 

Market Rate Affordable Multifamily Units Are Usually Quite Affordable

As of fourth quarter 2020, CoStar’s estimated average vacancy rate for market rate affordable multifamily units 

was 5.7 percent, 110 basis points lower than its estimated nationwide multifamily vacancy rate of 6.8 percent. 

CoStar’s fourth quarter 2020 estimated average monthly asking rent for market rate affordable multifamily 

units was $965. This is 30 percent below CoStar’s estimated nationwide multifamily average asking rent and a 

sizeable 45 percent below its estimated asking rent for Class A units, which tend to command the highest rents 

for their locations.

Which Metros Have the Most Market Rate Affordable Multifamily Units?

There are an estimated 20 metro areas each with more than 90,000 market rate units affordable to low-income 

households when applying the Fannie Mae housing goals methodology to the CoStar database of multifamily 

properties. As seen below, with over 415,000 units, representing more than 70 percent of the metro’s stock, the 

Houston metro area is estimated to have far and away the most market rate affordable multifamily units. 

Dallas-Fort Worth is second with over 290,000 market rate affordable apartments. Rounding out the top three 

metros is the Atlanta metro area with just over 225,000 market rate affordable units.

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10%

20%

30%

40%

50%

60%

70%

80%

90%

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

Number of Affordable Units

Share of Total Metro Units 

Number of Affordable Units Share of Total Market Units

Source Data: CoStar

Metro Areas with Over 90,000 Market Rate Affordable Apartments – 4Q2020

Note: Excludes U.S. Census bureau designated Outlying Areas, which tend to have few apartments. 
Multifamily Economic and Market Commentary

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0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

0%

10%

20%

30%

40%

50%

60%

Number of Affordable Apartments

Affordable Share of Stock

Affordable Share of Stock (includes federally assisted units)

Source Data: CoStar

Metro Areas with Relatively Few Market Rate Affordable Units* or Where Market Share of Affordable Units Is Low 

– 4Q2020

* Local Programs such as rent control programs in New York and San Francisco excluded because they do not fall under Federal Assistance

** Los Angeles metro area has 110,000 apartments affordable at market rents

Expensive Metros Offer the Fewest Market Rate Affordable Units

As shown below, many of the metros where there are a limited number of market rate affordable units are the 

usual suspects. Applying Fannie Mae housing goals methodology to the CoStar database appears to show that 

only an estimated 15,000 apartments in Boston, 17,000 apartments in San Francisco, and fewer than 10,000 

apartments in Orange County, CA could be classified as market rate affordable units. Only these units would 

potentially qualify as mission-driven business should they obtain financing from Fannie Mae under the 2021 

multifamily loan purchase cap requirements from FHFA. 

However, some surprising metros also fall into this category, such as West Palm Beach and Miami, each having 

fewer than 15,000 apartments that would qualify as market rate affordable units. One possible reason is that 

tenant incomes tend to be lower, even with more affordable rents in Florida as a whole.

Federally Assisted Housing Aids Greatly

As shown in the chart above, federally assisted rent- and income-restricted units significantly increase the 

affordable multifamily housing stock in some metro areas with few market rate affordable apartments. For 

instance, the 65,000 market rate affordable units in the greater New York metro area only represent about 5 

percent of all apartments. Including federally assisted units increases the share of all affordable units to 15 

percent of the metro’s multifamily housing stock. The greater Oakland metro area, including Contra Costa 

County, fares somewhat better with approximately 45,000 units affordable at market rates, representing just 

under 30 percent of market rate stock. However, including federally assisted rent- and income-restricted units 

increases the share of all affordable units to just under 45 percent of the metro’s multifamily stock.
Multifamily Economic and Market Commentary

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Updated Rents on Fannie Mae-Financed Units

Although the GSEs report on the affordability of their acquisitions each year in the Annual Housing Activities 

Report (AHAR), both only receive rent roll information in the year a multifamily property is financed. As a result, it 

is difficult to ascertain if a multifamily property financed several years ago is still affordable today. 

CoStar collects data on rents for most multifamily properties in its database on a quarterly basis. By matching 

Fannie Mae properties to the CoStar database, estimated updated asking rents and vacancies are available, 

providing a method to approximate current affordability. CoStar was able to estimate current asking rents and 

vacancies for about 90 percent of Fannie Mae-financed multifamily properties as of fourth quarter 2020. 

What is Fannie Mae’s Current Share of the Market Rate Affordable Multifamily Sector?

As shown in the table below, using updated CoStar data, it appears that Fannie Mae currently finances an 

estimated 10,000 properties with market rate affordable units. Taken all together, these properties appear to 

contain an estimated 1.7 million market rate apartments affordable to lower-income renter households.

As a result, it seems that Fannie Mae currently finances an estimated 21 percent of all market rate affordable 

units. Approximately 65 percent, or 1.1 million market rate affordable apartments financed by Fannie Mae, are in 

the top 50 metro areas for multifamily units. The remaining 35 percent, or about 600,000 units, are in smaller 

metros and tend to be in smaller multifamily properties. 

Category Properties Units Average Vacancy Average Asking Rent

Fannie Mae 10,000 1,700,000 4.8% $1,050

Nationwide Affordable 111,000 8,100,000 5.7% $965

Nationwide Market Rate 375,000 17 million 6.8% $1,375

Select Statistics – Properties with at Least One Market Rate Affordable Apartment – 4Q2020

Source Data: CoStar

Few Metros with Market Rate Apartments 

Affordable to the Lowest-Income Renters

As shown in the adjacent chart, there are very 

few metros with a significant number of 

market rate apartments affordable to renters 

with very low incomes. In fact, it appears only 

12 metro areas have more than 20,000 

market rate apartments that are affordable to 

households earning 50 percent of AMI. In 

addition to Houston, with 50,000 

apartments, Cincinnati, Columbus, and 

Kansas City, MO, each have only slightly 

more than 40,000 market rate units that are 

affordable to renter households earning 50 

percent of AMI. 

Metro Areas with Over 20,000 Market Rate Apartments Affordable 

to Renters Earning Half of Local AMI – 4Q2020

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2%

4%

6%

8%

10%

12%

14%

16%

0

10,000

20,000

30,000

40,000

50,000

60,000

Number of Affordable Units

Share of Total Metro Units 

Number of Affordable Units

Share of Total Market Units

Source Data: CoStar

Note: Excludes U.S. Census bureau designated Outlying Areas which tend to have few 

apartments. 

Note: Excludes U.S. Census bureau designated Outlying Areas which tend to have few apartments. 
Multifamily Economic and Market Commentary

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Fannie Mae Also Finances Larger Market Rate Affordable Properties

Applying housing goals methodology to the CoStar database of asking rents, it appears that Fannie Mae finances 

21 properties with at least 1,000 market rate affordable units. These include York Creek Apartments in the Grand 

Rapids metro area; Riverhouse Apartments in Pentagon City in Arlington, VA; and Oakcrest Towers in 

Forrestville, MD, just outside of Washington, DC. Each property has more than 1,500 market rate affordable 

units. 

Property Metro/Division Affordable 

Units

Average 

Asking Rent Vacancy 

Dublin Village Philadelphia, PA-NJ-DE 3,140 $1,150 0.1%

The Harbours Apartments Detroit, MI 2,390 $1,080 1.8%

Foxchase Apartments Washington (Hagerstown), DC-VA-MD 2,110 $1,500 0.4%

Ivy Hill Park Apartments Newark, NJ-PA 2,100 $870 0.4%

Somerset Park Detroit, MI 2,090 $1,210 3.1%

Riata Austin, TX 2,040 $1,345 6.1%

Canterbury Green Fort Wayne, IN 2,000 $980 3.0%

Timber Top Apartments Akron, OH 1,820 $701 0.1%

Lynnewood Gardens Philadelphia, PA-NJ-DE 1,800 $1,296 6.0%

Howard Crossing Apartment Homes Baltimore (Ellicott City), MD 1,610 $1,315 6.1%

The Village in Wixom Detroit (Wixom), MI 1,610 $815 1.7%

5002 Apartments Fargo, ND-MN 1,560 $760 0.0%

The Properties at Wright Field Dayton, OH 1,540 $1,125 8.0%

Lantern Village Houston, TX 1,520 $1,070 8.0%

Maple Gardens Newark (Irvington), NJ-PA 1,500 $1,195 2.0%

Fox Meadow Philadelphia, PA-NJ-DE 1,490 $1,375 2.5%

Brooklyn@9669 Dallas-Ft Worth, TX 1,470 $990 10.6%

Prairie Shores Apartments Chicago, IL-IN 1,430 $1,175 4.0%

Southview Washington (Oxon Hill), DC-MD 1,410 $1,280 2.1%

Gardenvillage Apartments & 

Townhouses Baltimore, MD 1,400 $920 1.1%

Select Non-Fannie Mae Financed Properties* With Many Affordable Units – 4Q2020

Source Data: CoStar * Excludes Condos, Co-ops, Student, Seniors, Military, Vacation, Corporate, and Federally Assisted housing

Lower Vacancy for Fannie Mae-Financed Market Rate Affordable Multifamily Units

As shown in the table on the previous page, as of fourth quarter 2020, Fannie Mae-financed market rate 

affordable units had an estimated average vacancy rate of 4.8 percent, according to CoStar. This is 

approximately 1 percent below its estimated vacancy rate for all market rate affordable units nationwide and 2 

percent below CoStar’s estimated average vacancy rate for all market rate multifamily units. 

Non-Fannie Mae-Financed Properties with Many Market Rate Affordable Multifamily Units

Market rate affordable multifamily properties contain about 75 market rate affordable units on average. 

However, these properties can be quite a bit larger, as shown in the table below. Three of the largest of these 

multifamily properties not financed by Fannie Mae – Dublin Village in the Philadelphia metro area; The 

Harbours Apartments in the Detroit metro area; and the Foxchase Apartments in the Washington, DC metro 

area – each appear to contain over 2,000 market rate affordable apartments. In all, CoStar identified just over 

90 properties with 1,000 or more market rate affordable units based on Fannie Mae housing goals 

methodology.
Multifamily Economic and Market Commentary

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Larger Metro Areas with Highest Market Penetration

As shown in the chart below there are six markets in which Fannie Mae appears to finance 30 percent or 

more of market rate affordable multifamily housing units. These include the St. Louis, Dallas-Plano, 

Fort Worth-Arlington, Charlotte, Nashville, and Frederick-Gaithersburg, MD metros.

Applying Fannie Mae housing goals methodology to CoStar’s multifamily database, it appears there are 

another 12 multifamily markets in which Fannie Mae finances between 25 percent and 29 percent of the 

market rate affordable units, including 27 percent of such stock in the Atlanta metro area and 25 

percent in Baltimore.

Other Markets

As shown in the chart below, among other metro areas, Fannie Mae appears to finance 24 percent of 

the market rate affordable multifamily housing units in Houston, 23% of the affordable units in Kansas

City, 22% of the affordable units in Columbus, and about 20% of the market in Jacksonville and 

Seattle.

Source Data: CoStar * Excludes Condos, Co-ops, Student, Seniors, Military, Vacation, Corporate, and Federally Assisted housing

0%

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40%

0

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St. Louis, MO-IL

Fort Worth-Arlington, TX

Charlotte-Concord, NC-SC

Frederick-Gaithersburg, MD

Nashville-Davidson, TN

Dallas-Plano, TX

Tulsa, OK

Tucson, AZ

Salt Lake City, UT

Richmond, VA

Oklahoma City, OK

San Antonio-New Braunfels, TX

Atlanta-Sandy Springs, GA

Austin-Round Rock, TX

Virginia Beach-Norfolk, VA-NC

Baltimore-Columbia, MD

Indianapolis-Carmel, IN

Memphis, TN-MS-AR

Houston-The Woodlands, TX

Kansas City, MO-KS

Denver-Aurora, CO

Columbus, OH

Phoenix-Mesa-Chandler, AZ

Jacksonville, FL

Montgomery County-Bucks County, PA

Louisville/Jefferson County, KY-IN

Seattle-Bellevue-Kent, WA

Cleveland-Elyria, OH

Raleigh-Cary, NC

Las Vegas-Henderson, NV

Portland-Vancouver, OR-WA

Chicago-Naperville-Evanston, IL

Cincinnati, OH-KY-IN

Omaha-Council Bluffs, NE-IA

Minneapolis-St. Paul, MN-WI

Fannie Affordable Units

Total Affordable

FM Share of Affordable

Fannie Mae Share of Market Rate Affordable Units in Select Metros with Over 50,000 Market Rate Affordable Units 

– 4Q2020

Note: Excludes U.S. Census bureau designated Outlying Areas which tend to have few apartments. 
Multifamily Economic and Market Commentary

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Additional Opportunity in Traditionally Affordable Metros

There are several metros that have been very affordable historically with ongoing opportunity. For instance, with 

more than 415,000 market rate affordable units in the Houston area and 155,000 affordable units in the greater 

Phoenix area, there is ongoing opportunity to finance market rate affordable units in these mostly affordable 

metros. 

Los Angeles and Chicago More Challenging

On the other hand, there are a couple of metros where it may be more challenging for any single entity to gain a 

significant share of the market rate affordable segment. Chicago and Los Angeles are two of the metro areas with 

the largest number of market rate affordable properties. However, CoStar estimates that there are more than 

57,000 market rate affordable properties in the Los Angeles-Long Beach metro as of fourth quarter 2020, but the 

average property has fewer than 20 units. Similarly, the average market rate affordable property size in Chicago 

was just over 30 units. As a result, any single market entity would need to finance a sizeable number of properties 

to make significant inroads in coverage of market rate affordable units in these metros.

Ongoing Market Opportunity for Mission-Driven Business

Nationwide, there appears to be over 8 million market rate affordable multifamily units in just over 110,000 

properties affordable to lower-income tenants. While Fannie Mae’s share appears to represent about one-fifth of all 

market rate affordable apartments as of the fourth quarter of 2020, there is additional opportunity for missiondriven business. That’s because CoStar data indicates that there are potentially up to another 6.5 million existing 

market rate affordable units in just over 100,000 properties that could change hands in the future, providing 

ongoing additional opportunities to help finance and preserve market rate affordable multifamily units across the 

country. 

Tanya Zahalak

Multifamily Economics and Research – Lead Economist

May 15, 2021

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 Mae will depend on many factors. Although the ESR 

Group 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 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.