Conditions in the multifamily investment market have improved, driven by a steep contraction in property prices and growth in net operating income (NOI) that together offset the effect of higher mortgage rates.

The effect was to boost Freddie Mac's Multifamily Apartment Investment Market Index (AIMI) for 1Q 2024 by 8.7% to 112.5. The hike in the latest AIMI marked a sharp reversal from its decline in the previous quarter. For investors, this signaled that the environment for multifamily investments is increasingly favorable. For the year as a whole, the AIMI rose by 8.1%.

"The rising index across the board this quarter is especially notable and was aided by the largest quarterly decline in mortgage rates since 2010," said Sara Hoffmann, director of Multifamily Research at Freddie Mac. She noted that falling property prices helped, along with a 56 basis point drop in quarterly mortgage rates – the biggest slump since 3Q 2010.