The multi-family industry continued to experience above-average performance in 2017.
were 336,000 multi-family units completed in 2017, an increase over the
321,000 units completed in 2016. According to the Fannie Mae 2018
Multi-Family Affordable Housing Outlook
, most new supply over the past
few years has been focused in high-rent segments.
there has been little growth in stock of affordable multifamily housing.
Strong demand for multi-family rentals has prompted developers to
renovate more affordable housing to higher-rent units.
impact of the two trends has been that while the number of Class A units
have grown by an estimated 1.1 million to 5.0 million total units since
the end of the recession, the number of Class B/C units remained
virtually unchanged at an estimated 5.7 million units (Reis, Inc.) We
expect to see this trend continue as information on 2018 becomes
According to the Joint Center for Housing Studies of
Harvard University, the number of multi-family units declined slightly
over the past year and expanding supplies of new luxury apartments
pushed up rental rates.
According to data from the National
Council of Real Estate Investment Fiduciaries, net operating income for
investment-grade multi-family properties in 2017 grew 3.4% from 2016.
addition, the annual rate of return on rental property investments was
6.4% for 2017. Rental property prices and sales remain strong. Real
Capital Analytics (a commercial real estate database which tracks prices
for rental properties and portfolios of at least $2.5 million), reports
that nominal apartment property prices rose at a 12% annual rate
averaged in 2014 – 2017.
As a result, apartment prices now stand 30% above the mid-2000s peak in real terms.
Readers should not act upon information presented without individual professional consultation.
Any federal tax advice contained in this communication (including any attachments): (i) is intended for your use only; (ii) is based on the accuracy and completeness of the facts you have provided us; and (iii) may not be relied upon to avoid penalties.