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4Q17 US Multihousing Report

4Q17 United States Multihousing Market Overview

ARA and Berkeley Point Capital present the Fourth Quarter 2017 United States Multihousing Market Overview. The statistics and outlook contained in the report illustrate current trends in the Multihousing sector.

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Executive Overview

Sales Volume The uncertainty following the election made for a turbulent start to 2017, as investment sales volume decreased 6.9% year-over-year to $150.1 billion. Robust capital, investors' increasing willingness to be flexible and a resilient economy are likely to accelerate volume in the year ahead.
Cap Rates Yields remain flat year-over-year at 5.0% nationally. Intense competition for value-add product in non-major markets and a lack of core opportunities in major markets have narrowed the spread between these two market tiers to just 60 basis points.
Rent Growth Annual effective rent growth remains above long-term averages, although the current rate of 2.3% is down 100 basis points year-over-year. Above-average growth is occurring throughout the West in markets such as Las Vegas, Sacramento and San Diego.
Supply and Demand Over 365,000 units were delivered in 2017, and large deliveries are expected to continue in 2018. Despite these strong levels, many key markets such as Houston and New York have seen demand exceed new supply over the past 12 months.
International Capital Acquisitions by international capital sources increased 17.7% to $11.8 billion during 2017. Much of the volume was through portfolio acquisitions of student housing properties by sovereign wealth funds and pension plans.
Debt Markets Multihousing debt outstanding increased to $1.2 trillion, up 2.1% quarter-over-quarter. Debt capital remains plentiful, especially among GSE lenders, as their debt outstanding increased 3.6% over the fourth quarter to $571.1 billion.

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