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It is high time for housing policymakers, researchers, and advocates to take seriously the role of increasing financial distress in the multifamily market. We need to craft solutions to both limit distress and most importantly: ensure tenants do not shoulder the burden when and where it does occur.

How are landlords responding?

1. The “extend and pretend” approach (where landlords and lenders reach agreements to delay loan refinancing or specific payments until financial conditions appear more favorable)

2. Increasing net operating income by raising rents and fees or cutting back on expenses

4. The climate crisis, one of the core causes of high insurance costs, worsening building conditions, and disruptions of supply chains. All while making resilient high-quality housing an even more urgent need.

More on this on our Substack: climatecommunityinstitute.substack.com/p/financial-...

2. Operating expenses: Risen rapidly, forcing LLs to spend more money to keep properties afloat. Multifamily operating expenses rose 28% from '23-24. Insurance is a core driver.

3. Political instability: the prospect of changes like HUD funding cuts or GSE privatization could also drive distress.

Historically low interest rates during COVID meant landlords refinanced or acquired new property. Now as loans come due rates are much higher, dampening speculation and refinance projections. It's a considerable share: In 2025, $300B in multifam mortgages matured, almost 15% of all multifamily debt.

Speculative bets on rising property values means landlords operate on thin margins. They have little wiggle room if operations become more expensive or property values fail to rise at the rate they project. This is where financial distress kicks in.

But what's driving this distress?

In our financialized housing system, landlords rely on large loans to acquire properties, raise revenue and decrease expenses to indicate an increase in property value, and then refinance their properties for a profit.

This research started by analyzing loan data on properties where tenants experienced deferred maintenance and fee hikes. In the data, debt service coverage ratios were on razor thin margins. Landlords were in trouble. Tenants were getting squeezed.

Turns out, this is a widespread trend.

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