AIMI, Orlando 2015 4th Quarter Apartment Investment Market Index Analysis
What is AIMI? AIMI is a Market Index Analysis tool released by Freddie Mac that estimates how the multifamily investment environment changes over time nationally and in select metros. Updated quarterly, the Index combines three market factors to present a value that can be compared to prior time periods. Together with our analysis, AIMI offers investors a unique insight into understanding the investment conditions for multifamily properties.
The three variables used to determine AIMI are:
- Multifamily mortgage rates
- Growth rates in multifamily property prices
- Growth rates in multifamily rental income
As reported below within the video from the Freddie Mac/Multi-Family website, “It is important that investors and other industry stakeholders stay on top of the shifting multifamily investment environment with the latest trend analysis and market insight that AIMI provides,” said Steven Guggenmos, vice president of Freddie Mac Multifamily Research and Modeling.
Guggenmos also added, “Together with our internal analysis, AIMI offers investors a unique insight into understanding the multifamily investment landscape. AIMI gives investors an opportunity to combine a few of the market drivers and track trends.”
When comparing AIMI’s values over two quarters for a specific metro, an increase implies the value of investing was more favorable, while a decrease implies a less favorable investment. Take a moment to review the report for the 4th quarter of 2015 for the Orlando, Florida market. In my observation, I thought it was very interesting that Freddie Mac chose Orlando as one of the markets that they analyze for AIMI, over other prominent multi-family markets such as Miami or Jacksonville in Florida.
The 13 metro areas AIMI tracks are: Atlanta, Austin, Chicago, Dallas, District of Columbia, Houston, Los Angeles, New York, Orlando, Philadelphia, Phoenix, San Francisco and Seattle.
Also, take a moment to view the video below the AIMI image for Freddie Mac’s Multi-Family Housing Outlook for 2016. In this outlook they do mention Jacksonville but as a city to watch for elevated vacancy rates, which will affect this market heavily in the coming year. Depending upon your investment strategy, vacancy rates may not be your top concern over a obtaining a well-priced property due to a distressed situation of vacancy. This is what makes the AIMI report interesting to study as it offers a different view for each investor based on their strategy and focus when reviewing a multi-family property for sale.
As you review the AIMI report for Orlando, you will notice the assessment given by Freddie Mac as this market being a little volatile due to the increase in property value exceeding the growth in net operating income (NOI). This results in investors having to pay a higher price for their return. For those investors who are studying the Orlando market knows that multi-family construction of apartments and town homes, not condominiums, has increased tremendously over the past few years and is not slowing down in 2016. So, this begs the question, how does AIMI help you as an investor? History and data provided by Freddie Mac will aid you in determining your next move in this market, whether you purchase or build multi-family properties in this area or any other market that they are researching.
Will you, as an investor, watch these reports to gauge your next move? Let me know in the comments. I, as a Realtor will be studying these quarterly reports and will post them here as they become available. I view this as a very valuable tool that I will use to aid my clients in understanding our ever changing market to ensure their continued success.
Sotheby’s International Realty® is a registered trademark licensed to Sotheby’s International Realty Affiliates LLC. Each office is independently owned and operated. Equal Housing Opportunity.
2016 Copyright Theresa M. Kraa, Realtor ®