McLEAN, VA—Multifamily investing fundamentals continue strengthening, yet the rate of growth has begun to moderate. That's the top-line story from Freddie Mac's latest study of using its Apartment Investment Market Index, issued Wednesday.
Fundamentals grew in the second quarter, both nationally and in all 13 major metro areas tracked as part of the GSE's AIMI. It's the second consecutive quarter of growth as measured by AIMI, which combines rental income growth, property price growth and mortgage rates into a single index.
Nationally, AIMI values rose by 2.6% in Q2 to 110.4 from Q1's score of 107.4, making Q2 of this year comparable to Q4 of 2000 in terms of overall values. On a local basis, the biggest quarterly gains were posted by Washington, DC (7.2%), Chicago (7.1%), Philadelphia (5.9%) and Seattle (5.7%).
“The increase in AIMI over the past quarter is due to strong NOI growth along with a declining mortgage rate environment,” says Steve Guggenmos, VP of research and modeling with Freddie Mac Multifamily. “These two pieces offset the growth in property prices. Strong demand is continuing to absorb new units despite today's relatively high rate of construction.”
Simultaneously, though, Freddie Mac notes that the latest AIMI index reflects a moderation in the multifamily market's rate of growth over the past year. Nationally, the AIMI index topped 115 in the year-ago period, and that translates into a 4.77% year-over-year decline in the score.
Locally, AIMI scores have fallen in 11 out of the 13 metro areas used to compute the index, dipping by by an average of 4.5 percentage points over the past year. Only Chicago and DC saw their AIMI scores increase from Q2 of 2015, by 0.7% and 0.6%, respectively.
A quarterly increase in AIMI values implies an increasingly favorable environment for multifamily investment opportunities. Conversely, a decline suggests that attractive investment opportunities are becoming harder to find.
McLEAN, VA—Multifamily investing fundamentals continue strengthening, yet the rate of growth has begun to moderate. That's the top-line story from
Fundamentals grew in the second quarter, both nationally and in all 13 major metro areas tracked as part of the GSE's AIMI. It's the second consecutive quarter of growth as measured by AIMI, which combines rental income growth, property price growth and mortgage rates into a single index.
Nationally, AIMI values rose by 2.6% in Q2 to 110.4 from Q1's score of 107.4, making Q2 of this year comparable to Q4 of 2000 in terms of overall values. On a local basis, the biggest quarterly gains were posted by Washington, DC (7.2%), Chicago (7.1%), Philadelphia (5.9%) and Seattle (5.7%).
“The increase in AIMI over the past quarter is due to strong NOI growth along with a declining mortgage rate environment,” says Steve Guggenmos, VP of research and modeling with
Simultaneously, though,
Locally, AIMI scores have fallen in 11 out of the 13 metro areas used to compute the index, dipping by by an average of 4.5 percentage points over the past year. Only Chicago and DC saw their AIMI scores increase from Q2 of 2015, by 0.7% and 0.6%, respectively.
A quarterly increase in AIMI values implies an increasingly favorable environment for multifamily investment opportunities. Conversely, a decline suggests that attractive investment opportunities are becoming harder to find.
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