Lowest Multifamily Asset Prices in Major Markets in 2023
In 2023, the most affordable U.S. apartment markets for investors were metros like Cleveland, Houston, and Detroit, where average per-unit sale prices in the Renter-by-Necessity segment fell below $100,000, driven by factors such as high interest rates, inflation, and oversupply.
Originally Published in Multi Housing News
Published on: July 31, 2024
In 2023, the average U.S. price per unit for RBN apartments stood at $147,256, which was $128,500 below the $275,764 Lifestyle average, and some $30,000 below the $187,361 overall average. Last year, the overall investment total amounted to $65.1 billion, $40 billion of which involved upscale properties, while the remaining $25.1 billion included working-class assets. Interest rates, job offerings, inflation, oversupply—these factors contributed to and will continue to command the trajectory of multifamily pricing.
“If the plan is to implement a value-add strategy and cash-flow with no plans to redevelop, then the best way to acquire an affordable deal right now is to take great risk in an unknown market or find an off-market deal with assumable debt or seller financing,” stated Ari Rastegar, CEO of Rastegar Co., an investment firm present in 13 states, but most active in Texas.
The price palette for multifamily investors interested in value-add plays is quite varied. Within the 50 metros we researched for this set, the average price per unit in 2023 ranged from $63,347 in Harrisburg, Pa., to $334,711 in Orange County. Meanwhile, developers delivered 60,258 RBN units across these 50 metros last year, just a fraction of the 309,073 Lifestyle units completed during the same interval.
