After reaching their trough in the first quarter of 2010, multifamily property values rose 25% over the course of the past two years, Freddie Mac said Tuesday.
The government-sponsored enterprise made this assertion after reviewing statistics from the National Council of Real Estate Investment Fiduciaries index.
Interest in the entire multifamily segment is growing with construction starts on buildings with at least five apartments increasing 48% when comparing just the first five months of 2012 to the year earlier period, Freddie Mac added.
"Further increases in rental demand are likely in the coming year as newly formed households postpone homeownership decisions until the economy strengthens and they have accumulated sufficient savings," said Frank Nothaft, vice president and chief economist for Freddie Mac. "Overall, apartment market trends may show further vacancy declines and rent gains, with property values improving as well."
In the yearlong period ending in March, 1.5 million U.S. households moved into rentals, a 4% increase in one-year's time.
"While nominal rents rose (2 to 4 percent) during the year ending March 2012, average rent on an inflation-adjusted basis remained below where it had been for much of the decade prior to the Great Recession," Freddie Mac wrote in its latest report.
Frank Nothaft discusses the market's rental focus in this video update.