Soaring rents and cheap funding made blocks of US rental apartments seem like a “can’t miss” investment during the pandemic. Developers piled in to take advantage by constructing millions of the multifamily units, while investors snapped up older complexes to renovate them.
Since then, borrowing costs have surged, and now there are emerging signs that some borrowers will struggle to refinance, Fitch Ratings said on Thursday. Rents are stabilizing, landlords’ expenses have risen and competition has grown, which will cause the delinquency rate for the assets to double this year to 1.3%, exceeding the pandemic peak, according to the ratings company.