Albany, NY, and many other affordable mid-sized metropolitan statistical areas (MSAs) outpaced the national rent growth average for single-family rental (SFR) properties in the first half of 2025, according to an analysis of Zillow’s Observed Rent Index, which tracks the 100 largest markets in the U.S.
Driven by high construction costs, land constraints, and rental affordability, developers are increasingly prioritizing smaller units in higher-density multifamily properties. Utilizing data from the U.S. Census Bureau’s annual Survey of Construction, the research teams at Chandan Economics and Arbor Realty Trust have analyzed how the characteristics of new multifamily properties continue to evolve.
In today’s constantly evolving market environment, partnering with a lender that can balance prioritizing speed of execution with tailored solutions makes all the difference in securing the financing you need. Arbor’s experience, expertise, and innovation, combined with our willingness to understand each deal and work to make it successful, set us apart from other multifamily lenders. In our more than three decades of closing deals, we’ve found that having these 10 items on hand at the beginning of your borrowing journey helps prevent roadblocks and streamlines the entire financing process.
The single-family rental (SFR) sector continued showing strength in several key areas in the second quarter of 2025, even as residential housing market growth moderated.
The U.S. housing market reflects a patchwork of local needs, preferences, and geographies, creating distinct storylines. Across the country, many significant shifts have occurred over the last five years, an analysis of U.S. Census Bureau data shows. More expensive housing markets tend to support higher percentages of rental households, and in fast-growing metros, rentals have become a highly effective and flexible way to house new residents.
In all market cycles, commercial real estate firms are better positioned to achieve successful results with leaders who are strong, confident, and authentic, qualities demonstrated by the dozens of speakers at the 2025 Real Estate Pride Roundtable in New York City.
Single-family rental (SFR) investing is surging as this asset class outperforms. With homeownership less attainable and lifestyle renting more popular, the sector’s tailwinds bode well for long-term growth. If you are new to this space, our guide has answers to commonly asked questions.
Bolstered by robust build-to-rent (BTR) activity, the single-family rental (SFR) sector continued to display strength even as the residential housing market moderated. Arbor’s Single-Family Rental Investment Trends Report Q2 2025, developed in partnership with Chandan Economics, provides original research and analysis of key performance metrics for investors to take a closer look at a sector on the rise.
Q: What is the Arbor Small Multifamily Price Index (ASMPI)?
A: The ASMPI estimates the average price appreciation for small multifamily properties on a quarterly basis, by comparing small multifamily cap rates and small multifamily rents.
Q: What is an index?
A: • An index starts with an assigned base, then increases or decreases with the change in value. In the case of the ASMPI, a base value of 100.0 is assigned to Q1 2000.
• For example, if the ASMPI stood at 100, then increased 5.0% during the quarter, the new value would be 105. Likewise, if the index decreased 5.0%, the new value would be 95.
• Other frequently used indices in the real estate industry include the S&P CoreLogic Case-Shiller Home Price Index and the Consumer Price Index.
Q: What is the purpose of the ASMPI?
A: • Given the lack of affordable rental housing supply to meet the robust demand, the index’s quarterly data provides insights on potential investment opportunities in the property sector.
• The index fills an important need in the marketplace for quarterly data analytics focused on small multifamily properties.
Q: How is the ASMPI calculated?
A: The ASMPI is calculated by comparing the historical relationship of cap rates on properties with primary mortgages between $1 million and $7.5 million, and the rental income earned on small multifamily properties (5 to 49 units).
Q: How do you define a “small multifamily property”?
A: For the purposes of the ASMPI, we define small multifamily properties as those which have 5 to 49 units. This is consistent with the distinctions made in the U.S. Census Bureau’s American Community Survey.
Q: How do you define a “primary mortgage” on a property?
A: A primary mortgage means that at least 50% or more of the financing on the property comes from this loan. For the purposes of the ASMPI, we use Chandan Economics’ database of loans with primary mortgages of $1 million to $7.5 million.
Q: What is the formula for calculating the ASMPI?
A: Property Valuation = Net Operating Income / Cap Rate
Q: What is a cap rate?
A: A cap rate is the annual rate of return on a property, also known as the annual yield.
Q: How do you determine the cap rates for the formula?
A: Chandan Economics tracks small multifamily cap rates through its loan database and economic models consisting of small multifamily properties with primary mortgages between $1 million and $7.5 million.
Q: How do you determine the net operating income for the formula?
A: • Operating income is calculated based on Chandan Economics’ models of annual contract rents for multifamily properties with 5 to 49 units, using data published by the U.S. Census Bureau in the American Community Survey.
• Operating income is adjusted for any vacancy losses. Other forms of property income other than direct rental income are not included as part of the model.
• An assumption in the model is that variable operating expenses are passed through to tenants.
Q: What is the methodology for the ASMPI?
A: The Arbor Small Multifamily Price Index is calculated by comparing the historical relationship of cap rates and operating income. Cap rates data are sourced from Chandan Economics’ loan database and data models consisting of properties with primary mortgages between $1 million and $7.5 million. Operating income is estimated by Chandan Economics’ models of annual rents on multifamily properties with 5 to 49 units. Primary sample data used for small multifamily rents model is sourced by the U.S. Census Bureau as part of the American Community Survey.
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