Is it a favorable time to invest in multifamily properties? The new Freddie Mac Multifamily Apartment Investment Market Index (AIMI) is a free online analysis tool that combines key multifamily-specific economic indicators to spot trends and provide insight into investment conditions in select major metros and nationally over time.
“It is important that investors and other industry stakeholders stay on top of the shifting multifamily investment environment with the latest trend analysis and market insight that AIMI provides,” Freddie Mac Multifamily Research and Modeling Vice President Steven Guggenmos said in a press release.
Updated quarterly, AIMI portrays how the relative value of investing in multifamily properties changes over time by combining three factors important to market observers and investors –rental income, multifamily property price growth and multifamily mortgage rates – to create a view of investment conditions in certain markets and nationally.
The relative value of investing is estimated by comparing the growth in net operating income (NOI) to the growth in property debt service. Mortgage rates and growth rates in property prices are used to determine changes in the debt service, while rental income growth (which includes changes in rent growth and vacancies) is used to determine changes in NOI.
“Together with our internal analysis, AIMI offers investors a unique insight into understanding the multifamily investment landscape. AIMI gives investors an opportunity to combine a few of the market drivers and track trends,” Guggenmos said.
Nationally, AIMI is at 107 as of the fourth quarter of 2015. The national index has been trending down over the past several quarters because of the increase in property values exceeding the growth in NOI, while mortgage rates remained relatively flat.