Using newly available data, the report reveals the affordable housing sector’s performance
SANTA BARBARA, Calif., Dec. 4, 2024 – Using never-before available data from Yardi® Matrix’s new affordable housing database, the latest Yardi Matrix Research Bulletin on the affordable housing sector shows that affordable housing expenses rose in 2024, but so did residents’ wages.
At a national level, expenses grew 6.4 percent year-over-year (YoY) through September for the average affordable multifamily unit, Yardi Matrix shows. This increase was mostly driven by insurance and marketing costs, up 20.3 percent and 18.4 percent YoY.
The average income-per-affordable-unit increased by 7.2 percent YoY in September, which is outpacing calendar year increases in 2023 (5.5 percent) and 2022 (4.6 percent). While rent increases in the sector have been limited, post-pandemic inflation increases have accelerated rent growth.
The data shows an 8.1 percent per unit increase YoY through September in net operating income (NOI) for affordable assets. Several metros were ahead of the curve with double-digit figures, such as Nashville (25.0 percent), San Diego (20.2 percent) and Raleigh (19.8 percent).
As expenses comprise 56.3 percent of an average affordable asset’s balance sheet, compared to 44.9 percent in market-rate properties, the sector operates on a thin margin.
“There is both good and bad news for affordable properties. The good news is that the formula that governs rent growth allows for higher increases when inflation and wage growth in the economy is high. The bad news is that expenses generally eat up a higher percentage of income in affordable properties than market-rate assets,” said Paul Fiorilla, director of research for Yardi Matrix.
The study’s data encompasses 6,443 affordable multifamily properties throughout 114 U.S. metros. Affordable properties are defined as assets in which at least 90 percent of units are designated as affordable.
Gain more information on the performance of the affordable housing sector.
Yardi Matrix offers the industry’s most comprehensive market intelligence tool for investment professionals, equity investors, lenders and property managers who underwrite and manage investments in commercial real estate. Yardi Matrix covers multifamily, affordable housing, student housing, vacant land, industrial, office, retail and self storage property types. Email [email protected], call 480-663-1149 or visit yardimatrix.com to learn more.
About Yardi
Celebrating its 40-year anniversary in 2024, Yardi® develops industry-leading software for all types and sizes of real estate companies across the world. With over 9,500 employees, Yardi is working with our clients to drive significant innovation in the real estate industry. For more information on how Yardi is Energized for Tomorrow, visit yardi.com.