Freddie Mac’s AIMI Shows Favorable Multifamily Investing

MCLEAN, Va., Jan. 12, 2022 (GLOBE NEWSWIRE) — The Freddie mac (OTCQB: FMCC) Multi-Family Apartment Investment Market Index® (LOVE®) remained positive in the third quarter of 2021, driven by growth in net operating income (NOI), strengthening the investment environment for multifamily properties. Overall, the index is up 2.6% quarterly and 3.5% annually, with every market examined posting a positive third quarter figure for the first time since 2019. Mortgage rates, a component of the index, decreased by 5 bases during the quarter. points, offsetting the 5bps increase in the last quarter, but remain down 37bps year-over-year.

“Propelled by strong net operating income growth and low rates, this quarter’s AIMI shows a positive environment for multifamily investors in most markets,” said Steve Guggenmos, vice president of Multifamily Research & Modeling. “Markets across the country are rebounding strongly from the impact of COVID-19, including those hardest hit by the pandemic.”

During the quarter, AIMI grew domestically and in all 25 markets.

  • The growth of the NOI has been universally positive for the markets and the country. The NOI rose fastest in New York and Tampa, at 13.2% and 11.5%, respectively. Even the slowest-growing metro area, Minneapolis, saw strong growth of 3.8%.
  • Real estate prices rose across the country and in 24 of the 25 markets; New York is the only metropolis to experience a decline of -1.8%.
  • Mortgage rates remained relatively stable, decreasing by 5 basis points, reversing the 5 basis point increase observed in the last quarter.

During the year, AIMI increased nationwide and in 23 markets, while markets in Jacksonville, Florida and Minneapolis saw modest declines in AIMI.

  • The NOI increased in the country and in all 25 markets. Two markets have seen the NOI grow by 25% or more over the past year: Tampa and Phoenix saw NOI growth of 25.0% and 27.4% respectively. The weakest NOI growth over the past year was seen in San Francisco at 1.7%.
  • The nation and all but one market saw growth in real estate prices. New York is the only market that has seen real estate prices fall.
  • Mortgage rates have fallen by 26 basis points over the past year.

In addition to national and local values, a sensitivity table is available that captures how the index value adjusts to changes in some underlying variable. Additional information about AIMI is on the Freddie Mac Multifamily website, including Faq and one video.

AIMI is an analytical tool that combines multifamily rental income growth, house price growth and mortgage rates to provide a single index that measures multifamily market investment conditions. A rise in AIMI quarter over quarter implies an increasingly favorable environment for multifamily investment opportunities, while a decline suggests that attractive investment opportunities are becoming harder to find relative to the previous period.

Freddie Mac Multifamily helps ensure an abundant supply of affordable rental housing by purchasing and securitizing mortgages on apartment buildings nationwide. About 90% of mortgages purchased support rental housing for households earning 120% of the region’s median income or less. Freddie Mac securitises about 90% of the multi-family loans it purchases, thereby transferring the majority of expected credit risk from taxpayers to private investors.

Freddie Mac makes home possible for millions of families and individuals by providing mortgage capital to lenders. Since our founding by Congress in 1970, we have made housing more accessible and affordable for buyers and renters in communities nationwide. We are building a better housing finance system for buyers, renters, lenders and ratepayers. Learn more about FreddieMac.com, Twitter @FreddieMac and Freddie Mac’s blog FreddieMac.com/blog.

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mike morosi
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Erin Mancini
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