Freddie Mac Reports its Multifamily Apartment Investment Market Index® Declined in Q4 2021

Freddie Mac is reporting that its Multifamily Apartment Investment Market Index® (AIMI®) declined by -4.8% in Q4 2021 and is down -2.4% when compared to Q4 2020. Record multifamily price appreciation, which saw its largest single-quarter growth in the history of the index, and rising mortgage rates more than offset unprecedented growth in net operating incomes (NOIs). Over the past year, property prices grew by 19.6%, mortgage rates increased by 6 basis points and NOI grew by 17.7%.

In a statement prepared for the release of the Q4 AIMI, Steve Guggenmos, Vice President of Research & Modeling at Freddie Mac Multifamily said, “The year-over-year AIMI decline shows us that it may be more difficult now to find attractive multifamily investment opportunities in some markets than it was a year ago. Even though we’re seeing off the charts net operating incomes, prices are also rising dramatically. In most markets, investors are paying more per dollar of property income compared with one year ago.”

In Q4 2021, AIMI decreased in the nation and 24 of the 25 markets, with New York being the lone exception. NOI growth and property price growth were both very strong, but prices grew quicker which led to near universal AIMI declines.

National NOI growth was 3.5% and every metro experienced growth. The fastest grower was New York at 7.3% while the slowest grower was Minneapolis at 0.6%.

Property prices grew in the nation and in every market. Price growth was strong this quarter, with the national growth rate clocking in at 7.0%, while three metros, Las Vegas, Phoenix, and Raleigh, North Carolina, all grew by more than 10%.