Our experts’ top takeaways from the newest multifamily real estate reports
The latest report from the National Multifamily Housing Council is in, and it’s a mixed bag. Here are the key findings, plus opinion from our multifamily experts.
Multifamily construction increases to meet demand
There continues to be a strong need for rental housing, with developers still working to keep up. Multifamily permits rose 2.8 percent from last quarter to a seasonally adjusted annual rate (SAAR) of 404,700 in the fourth quarter. Total annual multifamily permits declined 2.3 percent from 2016 to a total of 411,200 in 2017, but they remain at a high not seen since the 1980s.
There was an 11.8 percent increase in annual multifamily completions in 2017. The figure stands at 347,700, the highest number recorded since 1988. Even with these new properties hitting the market, increased demand looks set to continue into 2018.
Rent growth decelerates, remains strong in Orlando
Same-store apartment rents rose 2.6 percent in 4Q 2017, 10 basis points lower than the previous quarter and 50 bps lower than a year earlier. Rent growth deceleration was most pronounced in the West, with growth down 50 bps from the third quarter.
There’s good news for Orlando multifamily owners: the South, bucking the trend, recorded a 20 bps acceleration of rent growth in 4Q 2017. In fact, Orlando saw the highest year-over-year increase in average rent in Florida. Average rent here is $1,332, a year-over-year increase of 7.8%.
Transaction volumes decline, market values increase
The total transaction volume couldn’t match up to the record high of the previous year: annual volume totaled $150.1 billion in 2017, down 6.9 percent from the prior year’s all-time high of $160.3 billion.
Multifamily properties continue to prove a sound investment, however. The market value of investment-grade apartments, as measured by the National Council of Real Estate Investment Fiduciaries (NCREIF), rose 0.5 percent from 3Q 2017 and 1.7 percent from a year ago.
If you need help buying, selling or managing a multifamily property, the team at 100Units.com is here. As experienced multifamily advisors, we’re committed to helping you achieve your investments goals. We’ve helped thousands of clients close more than $100 million in multifamily property transactions. Learn more about how we can help you here.