How Multifamily Investment Trended in 2022

By Anca Gagiuc

The year 2022 has managed to surprise quite a few when it comes to multifamily investment patterns and preferences, leaving room for further interpretation. The Fed’s aggressiveness in reducing inflation has already raised short-term rates by 375 basis points through November and will likely push them up another 150-200 basis points by early next year. In a typical environment, the impact on multifamily prices and deal flow would have to be significant. But as we still exit a pandemic, “typical” is off the table.

To shed some light on how the investment market was faring at the end of the third quarter of 2022, we perused Yardi Matrix’s transactions datawhich covers all multifamily properties of 50-plus units across 140 markets—and the findings are fascinating: Nationally, the sales volume through the third quarter rose to nearly $157.5 billion, above the figure recorded during the same interval last year—$129.9 billion—a year that is in the books as the best one ever (thus far) for transaction volume.

To reach this total, of the 140 metros tracked by the data provider, a massive 73 markets recorded higher volumes of multifamily sales during the first three quarters of the year compared with the first three quarters of 2021. In another 17 markets, the volume remained flat—defined by a margin of 9.9 percent below, to 9.9 percent above the sales volume registered last year during the corresponding period. Decreases in the sales volume were present in 31 markets.

Narrowing the results, we drilled down to Yardi Matrix’s top 30 markets and the findings are of a similar pattern: in 19 markets transaction volumes increased, in seven figures remained virtually flat and, in four, investment figures were lower than the year prior.

In this study, we are looking at the top 30 markets grouped by how investment volumes performed.

Markets with multifamily investment volumes increases

In 2022 through September, the multifamily investment volume in these 19 markets totaled $64.2 billion, accounting for 40 percent of the national sales volume. Last year through the same interval, investors had traded $44.4 billion in multifamily assets.

Increases over last year ranged from as low as 11 percent in San Antonio, to as high as 620 percent in San Jose. Upon a closer look, these extremes illustrate these markets’ general performances: San Antonio posted a steadier performance, with a quicker post-pandemic rebound ($2.1 billion sales volume through the third quarter in 2021), while San Jose’s density and the outmigration that derived from it during the height of the pandemic kept investors cautious for longer (just $96.7 million through the third quarter of 2021).

By volume, San Jose and Detroit were the only two markets in this ranking not to reach the $1 billion-mark during the first three quarters of 2022 or any year before this. While San Jose showed a rebound to pre-health crisis figures—$624 million through the third quarter in 2019—Detroit had recorded limited transaction activity pre-pandemic ($151 million through Q3 2019), which could point to a promising and long-awaited recovery.

At the other end of the spectrum, the highest transaction volumes were registered in Houston ($8.7 billion), Miami ($5.6 billion) and Orlando ($5.3 billion). Houston’s evolution is astonishing—from $3.3 billion through Q3 2019, to $1.6 billion through Q3 2020, to a whopping $6.2 billion last year); Miami also had a post-pandemic resurgence—down from $2.1 billion in 2019 to $1.2 billion in 2020, and then up to $5.1 billion in 2021.

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