The Freddie Mac Multifamily Apartment Investment Market Index fell 0.3% in the second quarter after rising 1.8% quarterly in the first quarter of 2020. The NOI also fell 1.2%, making it the first time in index history that AIMI and NOI were negative in the second quarter.
AIMI combines multi-family rental income growth, property price growth and mortgage rates into a single index that measures multi-family market investment conditions.
The decline in the AIMI is mainly due to the negative NOI in the second quarter, which has happened for the first time since 2009, as well as mixed property price growth.
Falling mortgage rates were a bright spot. Year-on-year, the AIMI was up 6.1% as mortgage rates fell more than 60 basis points to 67 basis points for the fourth straight quarter. This is the fourth quarter in a row that rates have declined more than 60 basis points annually.
"Despite the decline in quarterly numbers, AIMI rose over the year, reflecting another significant decline in mortgage rates," said Steve Guggenmos, VP of Freddie Mac Multifamily Research and Modeling, in prepared remarks.
While AIMI results for the quarter were mixed, they were generally negative. The entire country and 20 metropolitan areas recorded a decrease in the AIMI, while only five metropolitan areas recorded an increase.
NOI growth was negative for the nation and in all markets except Philadelphia.
"The second quarter is usually a strong quarter in terms of NOI growth," the report said. "The quarterly contraction reflects the effects of the COVID-19 pandemic."
Price growth was mixed in the second quarter. "The nation saw property prices decline along with 14 metros, while nine metros grew and two metros saw flat house prices during the quarter," said Freddie Mac. "Mortgage rates were unchanged from the last quarter."
The new research follows other data showing softness in the multi-family segment. Take the National Multifamily Housing Council's newest Rent Payment Tracker, for example showed a waste of 2.4% in rental collections.