Although 2021 is not shaping up to break records for investors, multifamily housing broadly remains a source of stable returns. Many opportunities remain considering the persistently high demand for rental housing and low interest rates. Vacancy rates are poised to head downward, and rent growth will come out of negative territory. Multifamily real estate inventory will remain behind demand. Demographic shifts on the horizon indicate stronger market growth in the suburbs.
Vacancy Rates Peaking This Year
According to Fannie Mae's Multifamily Economic and Market Commentary from January 2021, vacancy rates should peak mid-year. Market analysts estimate that the national vacancy rate will hit 6.5% and then gradually improve heading into 2022. 
Higher vacancy rates clustered among Class A real estate as young professional left urban areas during the pandemic. In contrast, Class B and C housing vacancies remained stable due to their greater affordability. 
Slow Rent Growth
Multifamily real estate investors can expect minimal rent growth in the coming year. Rent growth dipped approximately 0.75% in 2020 compared to 2019. As 2021 progresses and society regains normalcy, rents could recover slightly by the end of year. Fannie Mae predicts rent growth to either break the zero mark or nudge upward by 0.5%. 
Within urban markets, Fitch Ratings anticipates that rents will recover and grow within two years after the shock of the pandemic. At this point, suburban markets, especially in the Sun Belt, continue to outperform urban multifamily real estate. 
Multifamily Real Estate Inventory
Builders will attempt to meet the demand for multifamily real estate in 2021. Surveys by the National Apartment Association indicate that roughly 300,000 to 400,000 new units are planned for this year. 
However, new construction will likely fail to eliminate the rental unit supply problem. Revenue dips and higher expenses for building owners in 2020 have depressed somewhat the rush to build new units.  Additionally, supply and labor shortages continue to force builders to delay new construction. 
From the perspective of investors, more multifamily properties owned by individuals may come on the market in increasing numbers this year. Data provided by CoStar show that individuals, often called "mom and pop landlords" own over one-third of affordable rentals. Their modest resources have increased their financial strain during the pandemic as their tenants became delinquent on rent in higher numbers. As of October 2020, the National Leased Housing Association reported that 89% of individual landlords had suffered revenue declines.  Such an environment could produce more motivated sellers than usual and thus yield additional opportunities for investors.
The strongest markets for multifamily real estate investors appear to be shifting to the suburbs. This is mostly due to Millennials entering midlife, which typically involves a shift from urban living to suburban living as people desire more living space and start families.  Although many people in that midlife age group will desire single-family homes, low supply could realistically keep them renting apartments.
The potential does exist right now that immigration may increase. Immigrants have long been prone to renting. The Joint Center for Housing Studies reported that 83% of recent immigrants rent. 
Recovery will largely define the coming year for multifamily real estate. Although property values remained strong through the pandemic, rent growth will be slow for a while. Investors should also keep an eye on the developing demand in suburban areas.
   https://www.fanniemae.com/media/37966/display
  https://www.cbre.us/research-and-reports/2021-US-Real-Estate-Market-Outlook-Multifamily
    https://www.naahq.org/news-publications/2021-apartment-housing-outlook