☹️Small Multifamily Properties Lead in Mortgage Delinquencies

↘️Two- to four-unit multifamily properties continue to show the highest rate of mortgage delinquencies among U.S. residential asset types, according to the Federal Reserve Bank of St. Louis. In Q1 2025, 2.02% of these loans were 60+ days past due—well above single-family homes (1.55%), condos/co-ops (0.73%), and townhouses (0.56%).

⚠️The "Missing Middle" at Risk

↘️Small and mid-sized multifamily buildings (2–49 units) account for more than 20% of the nation's housing stock and serve a disproportionate share of low-income renters. These properties, often referred to as the "missing middle," face greater delinquency risk tied to rental income instability, whether from vacancies, nonpayment, or broader economic stress.

😕Long-Term Shifts

↘️The share of housing represented by small and mid-sized multifamily assets has shrunk dramatically—from 5.9% in 1970 to just 0.8% by 2023. This structural decline has left the segment more vulnerable, despite its importance to the rental housing supply.

🤔💭Perspective

↔️While small multifamily properties top the delinquency rankings, today's levels remain historically low. The Q1 2025 rate of 2.02% is a fraction of the 15.2% peak reached in Q3 2024, underscoring an improvement from last year's stress.