Investors Still Paying Top Dollar for Multifamily

By Erika Morphy for GlobeSt.com
Multifamily acquisition yields and price per unit have hovered at record lows for several years. What does that mean for pricing? Yardi Matrix spells it out in its newest report on the asset class: It means investors are willing to pay up even as market conditions change. The average price per unit in 2019 was $155K up 8.8 percent from 2018, it notes.
One reason the sector will remain in demand among equity investors is its stable cash flows, Yardi Matrix says.
On the debt side, Fannie Mae and Freddie Mac have a combined $160B of allocations for 2020, while other lenders including CMBS and private equity are trying to increase multifamily originations.
On the equity side, transaction activity maintained its robust pace in 2019, with $108.8B of multifamily properties traded. Although that’s down six percent from 2018’s record high, it is the second-highest year for volume and the fourth consecutive year with multifamily transactions topping $100B, according to the report.
Yardi Matrix speculates investor demand could increase, noting that multifamily is a safer bet than other property types in the event of a downturn.
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