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Growing NOIs and low interest rates bolster the investment environment for multifamily properties.
KEY TAKEAWAYS
- Over the first quarter, NOI grew the quickest in Tampa and Phoenix at 3.1% and 2.7% respectively.
- Throughout the year, NOI decreased in the nation and across 15 markets. Similar to last quarter, San Francisco and New York had double digit declines of -16.5% and 121.7% respectively.
- Mortgage rates also decreased by 42 basis points over the past year.
- The nation and 16 markets experienced year-over-year property price growth, while metros experienced contraction. Chicago was the only metro with no price growth or contraction.
The Freddie Mac Multifamily Apartment Investment Market Index (AIMI) held steady in the first quarter of 2021, while growing net operating incomes (NOI’s) and low interest rates improved the investment environment for multifamily properties. The index is down 0.1% after two straight quarters of growth with the majority of markets in positive territory.
Over the first quarter, the nation and 18 markets experienced NOI growth, while NOI contracted in several other markets. In Tampa and Phoenix, NOI grew the quickest at 3.1% and 2.7% respectively. Property prices grew in the nation and in 22 of the 25 markets. San Francisco and New York had declines at -2.2% and -1.1% respectively, while Los Angeles contracted slightly at -0.1%. Mortgage rates also decreased by 6 basis points.
Throughout the year, NOI decreased in the nation and across 15 markets. Similar to last quarter, San Francisco and New York had double digit declines of -16.5% and 121.7% respectively. The nation and 16 markets experienced property price growth, while metros experienced contraction. Chicago was the only metro with no price growth or contraction. Mortgage rates also decreased by 42 basis points.
Steve Guggenmos, vice president of Freddie Mac Multifamily Research & Modeling, said, “The low rate environment and reliable net operating incomes are propelling the market forward. With a healthy level of demand and enthusiasm around the reliable asset class, growing property values continue to be the limiting factor in the index.”
Freddie Mac Multifamily ensures there is an ample amount of affordable rental housing by purchasing and securitizing mortgages on apartment buildings nationwide. About 90% of purchased mortgages support rental units for households earning 120% of area median income or below.
Additional information on AIMI, including videos and FAQs, can be found on the Freddie Mac Multifamily website.
