The Apartment Investment Market Index, a measure of nationwide financing conditions created by lending giant Freddie Mac, has grown on a yearly basis in four straight quarters for the first time since 2021 as investors expect more certainty in interest rates and construction.
The index, a combination of multifamily rental income, property prices and mortgage rates, rose 2.2% over the year ended in the second quarter, suggesting an increasingly favorable environment for apartment investment. However, the figure is still roughly 10% below the 10-year average.
The index "continues to show slight growth … as the market continues to work towards stabilization after significant volatility,” Sara Hoffmann, senior director of multifamily research at Freddie Mac, said in a statement. “While higher mortgage rates compared with last quarter increased the cost of financing, this was offset by lower property prices and modest rental income growth.”
On a quarterly basis, the index rose 0.3% with all 25 of its markets showing improvements in investing conditions.
Key points measured by Freddie Mac in its index include mostly positive performance in net operating income, with 14 urban markets posting growth year over year, led by the District of Columbia with a 4.4% increase.
Property prices declined in all metropolitan markets on a yearly basis and at the national level, where prices dropped 8.3%. Eleven metropolitan areas saw a slide in property value of more than 10%.