MCLEAN, Va., Dec. 15, 2022 (GLOBE NEWSWIRE) — The Freddie Mac (OTCQB: FMCC ) Multifamily Investment Market Index® (AIMI®) reported a quarterly decline of 5.4% in the third quarter of 2022, while the index declined by 23.5% year over year. AIMI declined nationwide and in all 25 markets on both a quarterly and annual basis, driven primarily by record mortgage rate increases.
“Rising mortgage rates continue to weigh on the investment housing market index,” said Steve Guggenmos, vice president of research and modeling at Freddie Mac Multifamily. “Property prices and net operating income, while positive, are now slowing, further exacerbating the decline. Multifamily fundamentals remain consistent and strong, but there is no doubt that higher rates are having an impact. “
In the quarter, AIMI decreased in the country and in all 25 markets. The main driver of the quarterly decline was higher mortgage rates.
- National NOI growth was 2.0% and all but two metropolitan areas experienced growth. San Diego was the fastest growing at 4.5%, while Phoenix and Las Vegas saw NOI declines of -1.3% and -0.7%, respectively.
- Property prices rose in the country and slightly more than half of the markets. Price growth slowed significantly from last quarter and is now below the long-term average.
- Mortgage rates rose 58 bps – the biggest quarterly increase in AIMI’s entire history going back to 2000.
During the year, AIMI declined nationally and in all 25 markets, driven by large increases in mortgage rates. The state and 20 metros experienced the largest annual AIMI decline since the series began in 2000.
- NOI growth was generally positive, although it is now slowing, but still exceeded 10% in more than half of the metros. Miami led the way with annual growth of 21.6%.
- Real estate prices have increased in the country and in all markets. Like NOI growth, real estate price growth is slowing compared to last quarter. Nine metros grew by less than 10%, while four metros saw growth of less than 3%.
- Mortgage rates rose by 194 bps – the largest annual increase in AIMI’s entire history since 2000.
In addition to the national and local values, a sensitivity table is available that shows how the index value is adjusted based on changes in certain key variables. More information about AIMI is on the Freddie Mac Multifamily website, including frequently asked questions and a video.
AIMI is an analytical tool that combines multifamily rental income growth, property price growth and mortgage rates to provide a single index that measures the investment conditions of the multifamily market. An increase in the AIMI from one quarter to the next implies a more favorable environment for multifamily investment opportunities, while a decrease indicates that attractive investment opportunities are becoming more difficult to find compared to the previous period.
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