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Mada Partners > Blog > Record-breaking start to 2022 for U.S. Multifamily Market
Multifamily investment

The multifamily market is off to a record start in 2022, with $2.1 billion in closings during the first quarter (Q1), according to Real Capital Analytics (RCA).

The NATIONAL ASSOCIATION OF REALTORS®’ (NAR) multifamily forecasts show that the multifamily market is off to a record-breaking start in the first quarter of the calendar year (CY) 2022. NAR forecasts that single-family home sales are expected to be 11% above last year, with an estimated 4 million single-family homes sold. Multifamily sales are forecast to increase by 3%, and with 2.7 million units sold, they are 16% ahead of last year’s pace.

The U.S. multifamily market continued its record-breaking streak in Q1 2022, with investment volume increasing 56 percent year-over-year to $63 billion, the strongest first quarter on record and bringing the trailing four-quarter total to $374 billion, according to Real Capital Analytics (RCA).In Q1 2022, multifamily accounted for 37% of total commercial real estate investment volume, followed by office at 21% and industrial at 20%.

The U.S. apartment market has been setting records for more than two years. The first quarter of 2022 marked the eighth straight quarter of record-breaking absorption totals for U.S. multifamily properties.

The U.S. multifamily market is on a record-breaking pace. Its first quarter absorption total of 695,100 units was up 12 per cent from Q4 2021 and 77 per cent higher than the previous annual record of 393,000 units in 2000, according to new data from MPF Research.

The net absorption of 96,500 units in Q1 2022 was the largest since 2000. The net absorption figure includes all apartment communities that were absorbed by purchase or through new construction, as well as those that were converted to another use or demolished.

Multifamily starts in Q1 2022 were at their highest level since 2000 at 181,300 units, up 8 per cent from the previous quarter and 108 per cent higher than last year’s first quarter total of 78,800 apartments.

The U.S. multifamily market continues to post strong results in the early part of the year, with all three major indicators showing positive signs for the first time in over a decade.

CBRE’s latest U.S. Multifamily MarketView report shows that average effective rents grew by 15.5 percent and the overall vacancy rate fell by 20 basis points quarter-over-quarter and was 2.5 percentage points lower than it was this time last year.

With $29.2 billion in total volume, Dallas/Ft. Worth was the largest metro for multifamily investment over the last four quarters, more than doubling the amount from a year earlier and accounting for 7.8% of the total in the United States. Atlanta came in second with $21.4 billion, up 150.1 percent from Q1 2021, and New York came in third with $17.7 billion.

The growth in supply is largely driven by an excess of equity capital that remains available at significantly higher rates than enjoyed in recent years combined with strong demand for apartments from both millennial renters and baby boomers downsizing into apartments after raising families in single-family homes.

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