Apartment Investment Market Index^® FAQs

AIMI^SM measures how the relative value of investing in multifamily properties changes over time. AIMI is updated quarterly based on current mortgage rates, property prices and rental rates. An increase in the Index over a specific time period tells you that the relative value of investing is higher now, while a decrease shows the relative value is lower.

Please note: The Index does not identify when you should invest, but instead how investing compares to prior periods. For example, if AIMI’s value for New York City is currently 112, and last quarter it was 90, then the cost of investing is currently less expensive compared to the cash flows received, implying there may be more attractive investment opportunities than in the prior quarter.

AIMI helps property investors determine how the relative value of investing has changed over time. AIMI blends important market indicators that impact leveraged investors to provide a metric that is easily comparable across time — at the national level or in select metros.

In the years following the Great Recession, the multifamily industry has experienced tremendous growth. On average, property prices are above their pre-recession peaks, rents are rising, while vacancy rates remain near their lowest level in years. Plus, funding has been historically cheap as mortgage rates are near historical lows.

AIMI combines these market influencers to produce a measure of changing conditions impacting investments in multifamily properties. AIMI's sensitivity analysis offers a tool to manipulate the inputs to determine the impact a change may have on the Index value.

Data is sourced from multiple notable vendors measuring different factors impacting multifamily investments.

• Rental income is estimated based on Axiometrics rent and vacancy data.
• Property price growth is estimated based on Real Capital Analytics Commercial Property Price Index (RCA CPPI™) and National Council of Real Estate Investment Fiduciaries (NCRIEF) Property Index Returns.
• Multifamily mortgage rates are compiled from the American Council of Life Insurers (ACLI).

AIMI is updated every quarter and posted online in the third month of the following quarter.

AIMI combines three of the most widely used market influencers that are important to investors:

• Property price appreciation
• Rental income growth
• Mortgage rates

These three factors impact the relative value of investing differently. AIMI compiles them into one value so you can determine how the relative value of investing has changed over time and assess any trends. We also provide our own insight and analysis — explaining the movements in the Index — at the national level and for the specific markets.

AIMI is not designed to compare one metro’s value to another. Instead it shows how the value of investing in multifamily properties in a single metro, or nationally, has changed over time.

For example, a value of 98 for Atlanta compared to 115 for Dallas does not indicate that the relative value of investing in Dallas is more favorable. The Index should be used to see if the value of 98 in Atlanta is increasing or decreasing. If Atlanta’s value during the same quarter of the prior year was 82, the Index would tell you that investing in an Atlanta multifamily property may be more favorable compared to last year.

We use the first quarter of the year 2000 as our benchmark, assigning it a value of 100. Two of the three variables AIMI uses to calculate current Index value — property price appreciation and net operating income growth — are benchmarked to 100 so both measurements start at the same point. These two variables are also metro-specific. The third variable — mortgage rates — is represented at the national level and is the same across all metros and the nation.

Property price appreciation is a measure of the value of a multifamily property. If property values increase, the property investor will pay more for the asset than if the investment was made in the prior period. With all else equal, paying more decreases the relative value of investing in that asset.

Rental income is a proxy for net operating income (NOI), which is the income collected on a property through its operations (rent, commercial income, laundry services, etc.) minus all of the expenses required to run the property. In AIMI, expenses are assumed to represent a constant share of the rental income. Therefore, the NOI growth is represented by gross income growth across the market. Gross income growth is rent growth adjusted for vacancies, where both vacancy rates and rent growth are averaged across the metro or at the national level. If gross income growth increases, the investor would receive higher cash flows, all else equal, increasing the relative value of investing in that asset. The converse is also true; if gross income growth decreases, the investor would receive lower cash flows, all else equal, decreasing the relative value of investing in that asset.

Mortgage rates are not indexed, unlike the other two variables, and are represented on the right axis of AIMI’s chart. If mortgage rates increase, it costs more for the investor to finance the asset, all else equal, decreasing the relative value of investing in that asset. If mortgage rates decrease, it costs less to finance the asset, all else equal, increasing the relative value of investing in the property.

No. The input factors are measured at the aggregate national or metro level. Individual property characteristics and location can produce different returns than indicated by AIMI.

The Index does not forecast expected investment returns on multifamily properties. However, in our sensitivity analysis, we provide tools for you to adjust NOI growth, mortgage rates, and property value growth to see the impacts they have on the Index value. The values included in the sensitivity table also do not represent a forecast reflecting Freddie Mac Multifamily’s opinion of expected growth, but is useful for individual users to understand the impacts of changing market conditions.

Each quarter, we release AIMI’s value using the most recent data available and will revise previous quarters to reflect revisions in the variables.