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Despite a fourth quarter dip, the Freddie Mac Multifamily Apartment Investment Market Index (AIMI) was up for 2023, indicating that investment conditions were better in the fourth quarter compared with the prior year.

For the fourth quarter, the AIMI fell nationally and in all 25 markets as did net operating income (NOI). Freddie Mac’s AIMI is an analytic tool that combines multifamily rental income growth, property price growth, and mortgage rates to provide a single index that measures multifamily market investment conditions.

“The end of 2023 was a tale of two directions for AIMI,” said Sara Hoffmann, senior director of multifamily research at Freddie Mac. “The index finished 2023 up overall for the year, but fourth quarter was down across the board. The market continues to adjust to the new reality of higher interest rates, which were offset by a steep contraction in property prices, while NOI was virtually flat when we look at 2023 as a whole. All in all, AIMI suggests that investors are paying less per dollar of property income compared with one year ago.”

NOI results were mixed for 2023, according to Freddie Mac, with 10 markets seeing growth and 14 seeing a decline. Seattle was the only market that remained essentially flat. Property prices decreased across the board, with the nation and all markets experiencing contraction. Nearly half of the market contracted by more than -12% for 2023.

For the fourth quarter, NOI decreased in the nation and all markets—contracting between -0.2% in Chicago to -3.5% in Charlotte, North Carolina. Property prices during the quarter dropped nationally in all markets, except for New York, which saw a slight gain of 0.2%.