McLEAN, VA–The multifamily investment environment, as measured by Freddie Mac's Multifamily Apartment Investment Market Index, continued to turn negative in the fourth quarter, driven by rising mortgage rates. AIMI combines rental income growth, property price growth and mortgage rates to measure multifamily market investment conditions.
In the fourth quarter, AIMI experienced a decrease in 12 of the 13 markets it tracks. At the national level, AIMI declined approximately 3.57%. Seattle (-7.75%) and Boston (-7.15%) experienced the sharpest declines, while Houston (2.49%) stood as the sole market to see an increase, largely due to the 2017 hurricanes.
Quarterly net operating income declined nationally and in many markets, although Freddie Mac said this was likely due to the seasonality of rents. Orlando and Houston were exceptions, with positive NOI growth over the quarter. Quarterly property price growth was strong, with increases in nine of the thirteen local markets and nationally. Three markets were essentially flat, while property prices in Chicago declined.
Annual Declines Too
On an annual basis, AIMI also posted decreases both nationally and in all local markets. Nationally, AIMI declined by 6.52%. Locally, Atlanta (-10.25%), Seattle (-9.93%) and Boston (8.68%) saw the most significant annual change in the index. Orlando (-0.15%) remained virtually flat.
However, 12 local markets and the nation experienced annual NOI growth, with Chicago the only exception. Property prices grew in every market except Philadelphia.
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
