Freddie Mac Apartment Investment Market Index Up 9.2% YoY

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Freddie Mac reported its Apartment Investment Market Index rose nationwide by 5.3% quarter-over-quarter and 9.2% year-over-year, continuing an upward trend.

Compared to the second quarter of 2024, when AIMI rose nationally but performance across metro areas was mixed, AIMI rose in all markets nationwide in the third quarter, both on a quarter-over-quarter and year-over-year basis.

“AIMI increased as mortgage rates fell, decreasing the cost of financing,” said Sara Hoffmann, senior director of Multifamily Research at Freddie Mac. “The third quarter of 2024 saw interest rates decline, and an annual increase in net operating income for the nation. When combined with the decline in property prices, this improved conditions for investment in the apartment market.”

Annual increases in AIMI were particularly pronounced on the West Coast, with the Oakland metro area up 17.3% and San Francisco up 15.7% year-over-year, and in the Mountain West, with the Denver metro area up 16.1% year-over-year.

Key data points measured by the third-quarter AIMI include:

Net operating income performance was mixed. Over the quarter, the nation and 18 metros experienced NOI growth, while NOI fell in six markets and was essentially flat in one: Las Vegas. “Over the year, NOI performance was mixed,” the report said. “The nation and 11 markets experienced NOI growth while NOI declined in 14 markets.”

Property prices were mixed. Property prices dropped in the nation and in 17 markets over the quarter. “Prices grew in seven markets while prices in one market (Boston) were flat,” Freddie Mac Multifamily said. “Over the year, property prices declined in the nation and in all markets. The price drop was not as severe as last quarter, but five markets still contracted by more than -10%.”

The report noted mortgage rates saw some relief as rates decreased 35 basis points over the quarter. “This was the second-largest quarterly decline of the last five years,” Freddie Mac Multifamily said. “Over the year, mortgage rates decreased by 12 bps. This is the first annual decline since the third quarter of 2021.”