Apartment Investment Market Index (AIMI^®) FAQs

AIMI® 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 with prior periods. For example, if AIMI’s value for New York City increases from 105 to 112, then the cost of investing is currently less expensive compared with the cash flows received, implying there may be more attractive investment opportunities than in the prior period.

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

Data is sourced from multiple notable vendors including:

• Rental income is estimated based on RealPage 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 is typically 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 investment conditions have changed over time. We also provide our own insight on the movements in the index.

AIMI is not designed to compare one metro’s value with 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 with 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 with 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 the current index value — property price appreciation and net operating income (NOI) 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 — represents the national rate and is applied to 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 were 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 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. 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. 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. Factors such as 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. The values included in the sensitivity table do not represent a forecast reflecting Freddie Mac Multifamily’s opinion of expected growth.

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