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The Freddie Mac Multifamily Apartment Investment Market Index (AIMI) rose by 5.3% in the first quarter. The quarterly increase was a contrast from the fourth quarter, which saw a 7.6% drop. On a year-over-year basis, the index is down 16.6%; however, that is not as severe as the fourth quarter when the index saw a 25.8% drop from the same period in 2022.

The AIMI combines multifamily rental income growth, property price growth, and mortgage rates to provide a single index measuring market investment conditions. A decline suggests attractive investment opportunities are becoming more difficult to find compared with the prior quarter, while an increase from one quarter to the next implies an increasingly favorable environment for investment opportunities.

“The annual decline in AIMI remained reflective of the year’s higher mortgage rates,” said Sara Hoffmann, director of multifamily research at Freddie Mac. “But over the prior quarter, mortgage rate volatility slowed down, and the increase in AIMI was mostly a product of property prices reacting to the higher mortgage rate environment."

AIMI increased in the nation and in all 25 markets Freddie Mac covers over the quarter. This is due mostly to property prices falling as a result of still-elevated mortgage rates despite slight declines in net operating income (NOI), according to Freddie Mac.

Quarter over quarter, NOI was down in the nation and most markets, with Raleigh, North Carolina, being the lowest performer at -1.7%. Property prices also dropped in the nation and all markets—a second consecutive quarter of universal decline. In addition, mortgage rates dropped slightly by 7 basis points, the first quarterly decline seen since the third quarter of 2021.

Year over year, NOI saw a national growth rate of 3.4% and only declined in three markets—Atlanta, Las Vegas, and Phoenix. Property prices were mostly negative, contracting nationally by -7.2%, the first annual decline since the second quarter of 2010. In addition, mortgage rates rose by 246 basis points, which is down from the fourth quarter’s increase but still the second-highest annual increase in the history of the AIMI dating back to 2000.