Q2 2023: Multifamily REO Volume Nearly 3x Higher than Previous Quarter

U.S. Multifamily Two Year Historical – Q2 2023

While there were fewer new defaults on multifamily loans in Q2 compared to the previous quarter, banks reported a substantial increase in the volume of non-performing multifamily loan mortgage loans moving into the nonaccrual stage.

Dive into the BankProspector dashboard to find out which banks are holding the most non-performing notes now.


A strong appetite for multifamily assets over the past few years had kept this space solid.

U.S. Multifamily Nonaccrual Two Year Historical – Q2 2023

However, between hyperinflation, rocketing interest rates, more constrained credit and capital markets, and a flattening out of rents, it seems more multifamily loans are heading towards foreclosure.

Fewer new delinquencies may be happening. Yet, nonaccrual, 90+ date late, and multifamily REO pools all seem to be growing.

This trend seems to be spreading across more institutions, with 245 banks reporting that they held non-accrual stage multifamily mortgage loans in Q2.

Multifamily REO

U.S. Multifamily REO Two Year Historical – Q2 2023

While still modest in terms of dollar value, multifamily REOs also saw a huge increase in Q2, almost tripling from Q1.

It could be that the best properties have already been cherry picked by investors, leaving the less profitable inventory to rot on the market.

A shift in geo focus by investors in the multifamily space could also be partially responsible for this, as they seek out more affordable and sustainable projects in lower cost areas.

Looking Ahead

Multifamily debt and income properties are still desired by sophisticated investors and funds, perhaps even more so today given the outlook for other areas of the economy and other asset classes.

Yet, tenants are under increasing financial distress, and some of the best deals may have already been acquired.

Investors may look earlier on in this pipeline of distressed multifamily loans to spot the best opportunies.

Log in now to see which banks are holding the most distressed multifamily loan notes…

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