Affordable multifamily operators are enjoying another year of solid performance as decelerating expense growth and steady income gains have driven net operating income higher through 2025, according to Yardi Matrix’s October national affordable housing report. The increase marks the second consecutive year of strong NOI growth following several years of post-pandemic cost pressures.
Between 2021 and 2023, expense growth consistently outpaced earnings. Yardi Matrix said that property income rose 2.9% in 2021, 4.6% in 2022 and 5.7% in 2023, while expenses increased 5.5%, 7.8%, and 8.3%, respectively. That trend reversed in 2024, when income grew 6.5% compared with a 5.8% rise in expenses, resulting in a 7.4% year-over-year increase in NOI.
The positive dynamics have continued into 2025, with income up 3.7% and expenses rising only 2.3% through August, producing an average 5.6% NOI gain. As of August, average income per unit at affordable properties reached $15,440, while operating expenses averaged $8,554, generating $6,886 in NOI per unit.
Several metros reported robust performance. Raleigh, Kansas City, Columbus, Washington, D.C. and Philadelphia all recorded double-digit NOI increases year to date, while San Diego and Indianapolis approached 10%. In contrast, Austin, New Jersey, Seattle, Baltimore, Atlanta and Charlotte saw NOI declines.
Income growth at affordable properties has been bolstered by Department of Housing and Urban Development (HUD) formulas that factor inflation and wage growth into rent increases. HUD also revised its Operating Cost Adjustment Factors (OCAFs), which determine allowable rent increases under the Section 8 subsidy program.
At the same time, post-pandemic inflation pressures have eased, particularly in insurance and maintenance costs, Yardi Matrix noted. Expense categories that spiked between 2021 and 2023 are now returning toward historical averages, with the steepest slowdowns occurring in markets that experienced the sharpest cost increases in recent years.
Between 2021 and 2024, fully affordable properties saw operating expenses rise 24% ($1,592 per unit), while income per unit climbed 18% ($2,245 per unit). The report cautioned, however, that volatility in labor and materials costs remains a concern, especially for owners who deferred maintenance to cut expenses during the inflationary period.
Looking ahead, Yardi Matrix warned that 2026 could bring new headwinds. As inflation and wage growth cool, income growth is expected to moderate. Additionally, potential federal budget cuts to HUD programs and proposals requiring full-time employment for adults in voucher-assisted households could reduce the number of renters eligible for housing aid.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.