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Arbor’s Small Multifamily Investment Trends Report Q2 2022, published in partnership with Chandan Economics, takes an up-close look at a sector poised to benefit from a unique set of market forces. As cap rates compress to record lows, more buyers are pursuing inflation protection in the multifamily sector and the small asset subsector.

In the years leading up to and through the onset of the pandemic, growing demand for single-family housing and the emergence of the single-family rental sector (SFR) has reshaped the residential landscape in the U.S. But as SFR’s share of rental households expands, its share of all single-family homes remains balanced.

Following record gains last year, the housing market may have reached an inflection point. Rents are surging nationwide as a supply/demand imbalance leaves renters and would-be homebuyers with fewer housing options. However, The Joint Center for Housing Studies at Harvard University contends in The State of the Nation’s Housing 2022 that the current torrid pace of the market might be ready to ease up, with a record number of new units under construction.

Fannie Mae and Freddie Mac have pledged to expand their lending efforts to help improve Americans’ access to manufactured housing, affordable housing, and rural housing in recent updates to their Duty to Serve Underserved Markets Plans.

Apartment NOIs were up nearly 20% year-over-year through Q1 2022. A trio of Florida markets led the country in annual NOI growth, while New York and Phoenix trailed closely behind.

Federal, state, and city policymakers are now utilizing zoning reforms in initiatives that encourage the development of affordable housing.

In many parts of the U.S., a supply/demand mismatch is pushing rents higher at a time when interest rate hikes are causing some would-be home buyers to consider delaying ownership.

The Spring 2022 Arbor Realty Trust-Chandan Economics Affordable Housing Trends Report provides comprehensive insight and analysis of major trends shaping affordable housing nationwide. Our report examines the major market developments and the outlook ahead.

The multifamily sector is well-positioned to absorb the shock of rising interest rates. Bolstered by a supply/demand mismatch, multifamily has a solid foundation to support growth during the Federal Reserve’s monetary tightening cycle.

On balance, the SFR sector is well-positioned to see continued growth in 2022 as cyclical forces play in its favor, and underlying demand for single-family housing remains strong. Here’s a look at the latest SFR investment benchmarks.