1Q Apartment Investment Rises, Driven by Falling Mortgage Rates
Freddie Mac said its Apartment Investment Market Index rose 1.8 percent in the first quarter after declining modestly in late 2019.
Falling mortgage rates and positive net operating income growth nationwide and in most markets drove the growth, said Freddie Mac Multifamily Research and Modeling Vice President Steve Guggenmos. Rates decreased 21 basis points during the quarter.
“The substantial drop in mortgage rates has been a significant driving factor in the growth of AIMI this quarter and over the course of the year,” Guggenmos said, noting the index reflects a healthy market for investors “bolstered by strong net operating income growth and high demand for rental units across the country.”
On an annual basis, the index rose as mortgage rates experienced their second-largest annual decline–95 basis points–since Freddie Mac created the survey in 2000.
During the first quarter, the index increased for the nation and each of the 25 markets Freddie Mac tracked except for Nashville, which experienced essentially no growth.
–NOI growth was positive nationally and in 18 of the 25 markets tracked. But growth was limited, with only five metros exceeding 1 percent growth. Seattle and Phoenix experienced by far the highest quarterly NOI growth at 2.7 percent and 2.3 percent, respectively.
–Property prices grew nationally and in 22 of the 25 markets tracked. The largest metros, including New York, Chicago and Houston, were the only ones to experience price contraction.
Over the past year, the index increased by at least 4.6 percent nationally and in every market.
–Apartment NOI grew nationally and in every market, Freddie Mac reported. San Francisco experienced the smallest growth at 1.8 percent while Phoenix was the only metro to surpass 10 percent growth.
–Property prices grew nationally and in 22 of the top 25 markets. Las Vegas and Phoenix were the only two markets to surpass 10 percent property price growth.
–Mortgage rates decreased by 95 basis points, the second-largest annual drop since 2000.
