MCLEAN, Va., March 17, 2021 (GLOBE NEWSWIRE) – The Freddie Mac (OTCQB: FMCC) Market index for apartment buildings® (AIMI®) rose 0.5% in the fourth quarter of 2020 after recovering (1.9%) in the third quarter of 2020. The marginal growth reflects a quarter in which falling mortgage rates offset negative changes in net operating income (NOI) and property price growth , both of which were partially driven by the COVID-19 pandemic. On an annualized basis, the AIMI rose 3.4% as mortgage rates fell 57 basis points (basis points).
“Throughout the year, AIMI remained positive nationally and in most markets, but some local markets felt the effects of the pandemic more severe and experienced significant contractions,” said Steve Guggenmos, vice president of Freddie Mac Multifamily Research and Modeling. “AIMI continued to grow in the fourth quarter and continued the trend of generally resilient apartment building fundamentals throughout the pandemic.”
During the quarter, AIMI rose in the nation and in most markets. Sixteen markets grew quarterly while nine metros grew quarterly.
- Most metros saw their NOI decline. The nation and 16 markets saw quarterly NOI contractions, while nine metros saw positive NOI growth. As in the previous quarter, New York and San Francisco were particularly pronounced with declines of -6.2% and -9.4% respectively.
- Real estate price growth was also mixed. Prices rose in the nation and 14 markets while prices fell in nine markets. There was virtually no change in house prices in two markets (Atlanta and Philadelphia).
- Mortgage rates fell 20 basis points.
During the year, AIMI rose in the nation and 18 markets, while AIMI fell in 7 markets.
- NOI fell in the nation and 15 markets. New York and San Francisco posted double-digit NOI losses for the second straight quarter. Ten markets saw NOI increases annually, including Jacksonville and Phoenix, which both grew more than 5%.
- The nation and 16 markets saw property prices grow while nine metros saw a decline. Property prices in Phoenix rose 11.2% – far higher than any other subway.
- Mortgage rates fell 57 basis points – a sharper decline than last quarter, but not as extreme as in the previous four quarters.
In addition to national and local values a Sensitivity table is available that tracks how the index value adjusts based on changes in certain underlying variables. Additional information on AIMI is on the Freddie Mac Multifamily website, including FAQs and a Video.
AIMI is an analytical tool that combines apartment rental income growth, property price growth, and mortgage rates to provide a single index that measures investment conditions in the apartment market. An increase in the AIMI from one quarter to the next implies an increasingly favorable environment for multi-family investment opportunities, while a decrease suggests that attractive investment opportunities are increasingly difficult to find compared to the previous period.
Freddie Mac Apartment Building helps ensure a sufficient supply of affordable rental housing by buying and securitizing mortgages on apartment buildings across the country. About 90% of the mortgages bought support rental units for households earning 120% of the area median income or less. Freddie Mac securitizes around 90% of the multi-family loans he acquires, thus transferring most of the expected credit risk from taxpayers to private investors.
Freddie Mac makes the home possible for millions of families and individuals by providing mortgage capital to lenders. Since our inception by Congress in 1970, we’ve made housing construction more accessible and affordable for buyers and renters in communities across the country. We’re building a better real estate finance system for buyers, renters, lenders and taxpayers. Learn more at FreddieMac.com, Twitter @FreddieMac and Freddie Mac’s blog FreddieMac.com/blog.