A National Bureau of Economic Research working paper quantifies a risk-adjusted return premium in the affordable segment of the multifamily rental market. Using matched rent, cost, and property-value micro data from the U.S., Belgium, and the Netherlands, the authors show that affordable properties consistently outperform high-rent properties, and that the gap is not explained by conventional risk factors.
Specifically, the NBER research found that:
- Affordable multifamily properties deliver higher annual total returns than higher rent properties in all three countries, with the gap reaching about 3.9 percentage points in the U.S.
- Higher yields in affordable properties remain after subtracting operating expenses, property taxes, turnover, and bad debt.
- Affordable rental property cash flows are less cyclical, making affordable multifamily assets and effective hedge to business-cycle risk.
Methodology and Context
The authors match administrative rent data, mortgage-loan performance data, and property sales to compute gross yields, net yields, and five-year capital-gain yields by rent decile. U.S. coverage draws on Fannie Mae, Freddie Mac, and private-label multifamily loans from 2001 to 2024, with NOI observed directly. Belgian and Dutch coverage uses population-scale rent registries linked to appraisal-based cost estimates and Dutch administrative records on tenants and landlords.
