Freddie Mac Multifamily’s quarterly analysis of multifamily investment market strength has reported an increase in the strength of market fundamentals during the second quarter. That occurred on both the national level and in all 13 major metro markets used to compute the Freddie Mac Multifamily Apartment Investment Market Index (AIMI).
Freddie Mac reported a 2.6% increase in the nationwide AIMI value for the second quarter, up to 110.4 from 107.4. Washington, D.C. saw the greatest local AIMI gain at 7.2%, followed by Chicago at 7.1%, and Philadelphia at 5.9%.
This rise in AIMI values from quarter to quarter implies an increasingly favorable investment environment nationwide. “The increase in AIMI over the past quarter is due to strong net operating income growth along with a declining mortgage rate environment. These two pieces offset the growth in property prices. Strong demand is continuing to absorb new units despite today’s relatively high rate of construction,” said Steve Guggenmos, vice president of Freddie Mac Multifamily Research and Modeling in a press release.
On a year-over-year basis, however, the AIMI has fallen by about 4.6 points, from over 115 at the end of the second quarter of 2015 to 110.4 in the second quarter of 2016. Locally, AIMI scores have fallen by an average of 4.5% YOY in 11 out of the 13 major metro markets in the index. The exceptions are Chicago, where the local AIMI has increased by 0.7%, and Washington, D.C., where it has increased by 0.6%.
Additional information about the AIMI, including a sensitivity table that demonstrates how the Index value changes based on certain conditions, can be found at Freddie Mac Multifamily.