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Multifamily acquisition yields and price per unit have hoveredat record lows for several years despite Treasury yields moving upand down by more than 150 basis points during that time. What doesthat mean for pricing? Yardi Matrix spells it out in its newestreport on the asset class: it means investors are willing to pay upeven as market conditions change. The average price per unit in2019 was $155,000, up 8.8% from 2018, it notes.

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One troubling exception to this pricing trend is New York City,where multifamily property values were hit hard by the new rentcontrol law that limits rent growth, the ability to bring vacantunits up to market rates and the ability to raise rents inconjunction with property repairs, the report notes. "Transactionactivity for rent-stabilized apartments fell off in the second halfas owners tried to determine how much values have fallen, withestimates ranging between 25% and 50%," it said.

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Leaving the New York market aside, Yardi Matrix declares thatinvestor demand for multifamily is likely to remain insatiable,with transaction volume just below record highs in 2019.

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One reason the sector will remain in demand among equityinvestors is its stable cash flows, Yardi Matrix says.

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On the debt side, Fannie Mae and Freddie Mac have a combined$160 billion of allocations for 2020, while other lenders includingCMBS and private equity are trying to increase multifamilyoriginations.

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On the equity side, transaction activity maintained its robustpace in 2019, with $108.8 billion of multifamily properties traded.Although that's down 6.0% from 2018's record high, it is thesecond-highest year for volume and the fourth consecutive year withmultifamily transactions topping $100 billion, according to thereport.

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Yardi Matrix even speculates that investor demand could increaseas the cycle lengthens and buyers look for a safe landing spot forcapital, noting that multifamily is a safer bet than other propertytypes in the event of a downturn.

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For example, office must deal with weakening demand fromworkplace trends, and retail is only beginning to work through thefallout from growth in online shopping. "Many investors arecounting on demand for apartments to remain relatively consistenteven if the economy weakens due to demographic and social trends,"it concludes.

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