Multifamily Investment Index Drops As Mortgage Rates Increase
Moreover, negative quarterly net operating income growth occurred nationally and in ten local markets -- likely due to the seasonality of rents.
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.