Freddie Mac Multifamily: Apartment Investment Market Index Rises

Freddie Mac Multifamily reported its Apartment Investment Market Index rose by 5.3% in the first quarter but decreased year over year, with the annual index down 16.6%.

AIMI’s quarterly increase nationwide and in all 25 markets studied represented a sharp reversal from last quarter’s drop. Meanwhile, the annual decline nationwide and in all 25 markets was large but not as severe of a fall from the previous quarter.

“The annual decline in AIMI remained reflective of the year’s higher mortgage rates,” said Sara Hoffmann, director of multifamily research at Freddie Mac. “But over the prior quarter, mortgage rate volatility slowed down, and the increase in AIMI was mostly a product of property prices reacting to the higher mortgage rate environment.”

Over the quarter, AIMI increased in the nation and in all 25 markets, a sharp reversal from last quarter due mostly to property prices falling as a result of the still-elevated mortgage rates, despite slight declines in net operating income.

-Net operating income declined in the nation and most markets. However, no metros were deeply negative with the lowest performer being Raleigh, N.C. at -1.7%, the report said.

-Property prices dropped in the nation and in every market, the second consecutive quarter of universal decline.

-Mortgage rates dropped slightly, by 7 basis points, the first quarterly decrease since third-quarter 2021.

Looking back over the year, Freddie Mac Multifamily noted AIMI decreased nationally and in all 25 markets, driven by the large increase in mortgage rates. The annual decline is large but not as severe as last quarter.

-NOI growth was generally strong with a national growth rate of 3.4%, the report said. NOI declined in three markets (Atlanta, Las Vegas and Phoenix).

-Property price performance was mostly negative, and prices nationally contracted by -7.2%. “This is the first annual decline in property prices since the second quarter of 2010,” the report said.

-Mortgage rates increased by 246 basis points; a slight pullback from last quarter’s jump, but still the second-highest annual increase in the entire history of AIMI going back to 2000, Freddie Mac Multifamily reported.