Freddie Mac Sees Improving Multifamily Investment Opportunities - Real Estate, Updates, News & Tips

Freddie Mac Sees Improving Multifamily Investment Opportunities

Falling Property Prices, Interest Rates Improve Buying Conditions

It may be slightly easier now to find attractive multifamily investment opportunities than it was at the end of last year, according to housing finance giant Freddie Mac.

Freddie Mac’s Multifamily Apartment Investment Market Index rose by 8.7% in the first quarter as well as over the full year, with the annual index up 8.1%.

The AIMI’s quarterly rise occurred nationwide and in all 25 regional markets, signaling a sharp reversal from a decline in the fourth quarter. The synchronized gains quarterly and annually indicate improved investment conditions in the first quarter of 2024.

A rise in the index from one quarter to the next implies an increasingly favorable environment for multifamily investment opportunities, while a decline suggests that attractive investment opportunities are becoming more difficult to find compared with the prior period.

“A decline in property prices and interest rates contributed to the AIMI’s strong start in the first quarter of the year,” Sara Hoffmann, director of multifamily research at Freddie Mac, said in a statement. “The rising index across the board this quarter is especially notable and was aided by the largest quarterly decline in mortgage rates since 2010.”

Mortgage rates dropped 0.56% quarter to quarter — the largest decline since the third quarter of 2010. This is a sharp reversal from the fourth quarter when rates rose by 0.58%. Mortgage rates were still higher than they were in the first quarter of last year, according to the index.

Property prices dropped 2.4% quarter to quarter in the nation and in all markets, with drops ranging from negative 0.4% in Chicago to negative 3.8% in Denver. Over the year, property prices have fallen 9.3%, according to the Freddie Mac index.

Net operating income performance quarter to quarter was mixed. The nation and five metro areas saw essentially no growth — between negative 0.1% and 0.1%. Five metro areas recorded NOI growth of at least 1%: Minneapolis, Miami, Chicago, Las Vegas and San Francisco. Four markets recorded NOI contraction of negative 1% or less: New York, San Diego, Dallas and Raleigh, North Carolina. For the year, NOIs were up 0.5%, according to the index.


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