Multifamily appears poised for another bullish year in 2022 as healthy economic growth, rising apartment occupancy and capital flowing into multifamily, Yardi Matrix says in their winter report.
“We anticipate demand for apartments will remain robust, highlighted by strong economic growth and household formation. Meanwhile, capital conditions will be favorable, driven by investors’ insatiable appetite for stable income and low mortgage rates,” Yardi Matrix writes in the report.
The report says that supporting the multifamily performance is the economy, which grew by 6 percent in 2021, the highest rate in 40 years, driven by federal government stimulus and the increase in consumer wealth.
“While growth will almost certainly decelerate in 2022, the outlook for the economy remains bullish,” the report says.
Rent Growth Expected To Be Solid in 2022
“After asking rents rose 13.5 percent nationally in 2021, it’s an easy call to forecast a moderation in rent increases. However, we still expect overall U.S. rent growth to reach 4.8 percent in 2022, well above the long-term 2.7 percent average.
“The conditions that drove higher rents in 2021—including pent-up demand coming out of the pandemic, strong job growth, soaring home prices and healthy consumer savings—have not fully subsided,” Yardi Matrix says in the report.
The report points out that “headwinds” remain in 2022 such as labor force participation and inflation.
However the capital outlook is still strong.
“The amount of investment capital chasing multifamily, both equity and debt, is enormous. Property values are rising rapidly, driven by lower acquisition yields and increases in net income as asking rents shoot higher.
“Some $166 billion of multifamily transactions were completed in 2021, up 75 percent from 2020, and the only limit is the number of properties put up for sale. Debt availability is also robust, led by Fannie Mae and Freddie Mac, which have increased capital allocations in 2022. Multifamily debt has also driven record levels of lending by private equity funds,” the report says.
Conclusion
“We have every reason to believe, and expect, another two years of growth, until interest rate and monetary policy tightening designed to rein in inflation induce a recession in either 2024 or 2025.”
Get the full report from Yardi Matrix here.
About Yardi Matrix:
Yardi Matrix researches and reports on multifamily, office and self-storage properties across the United States, serving the needs of a variety of industry professionals. Yardi Matrix Multifamily provides accurate data on 18+ million units, covering more than 90 percent of the U.S. population. Contact the company at (480) 663-1149
