With rising inflation and expected Fed interest rate hikes, multifamily investing remains attractive for 2022 due to ongoing housing demand. Investors should target cities with strong in-migration, job growth, and multifamily fundamentals. Top cities include Dallas, Atlanta, Phoenix, Charlotte, and Denver. These offer affordable home prices or rents relative to incomes, contributing to positive multifamily returns. Investing in cities with limited new supply coming online also bodes well for occupancy and rent growth.
Dallas and Atlanta have affordable housing and booming job markets
Dallas and Atlanta stand out with their booming job markets and relatively affordable housing. Both metro areas are seeing strong in-migration of residents from more costly states like California. With corporations expanding offices or relocating to these cities, demand is outpacing new housing supply. Rent growth is forecast to exceed the national average. With Dallas’ central location and business-friendly environment, along with Atlanta’s status as a major tech/entertainment hub in the Southeast, these two metro areas offer excellent prospects for multifamily returns.
Fast-growing Phoenix has positive demographics for multifamily
Phoenix is another top pick for multifamily investing, benefiting from rapid population growth and limited new supply. Millennials and remote workers are flocking to Phoenix for its warm climate and affordable housing. With home prices up over 30% in 2021, more residents are renting apartments. But new construction is constrained by lack of land and labor. Phoenix rents are projected to rise over 9% in 2022. Occupancy should remain high. Phoenix’s strong demographics, including the young college population, point to ongoing multifamily demand.
Charlotte and Denver have tight multifamily markets
Other cities to target for multifamily investing include Charlotte and Denver. Job creation in financial services and tech is driving Charlotte’s in-migration, while its centralized location makes it a distribution hub. But new apartment construction has lagged population growth, squeezing occupancy rates. Rent growth in Charlotte is expected to exceed the U.S. average through 2025. In Denver, new household formation is outpacing new housing supply. Apartment vacancy fell to just 4.2% in 4Q 2021, among the lowest nationwide. Rents could rise 8% in 2022 and remain strong as remote migration persists.
For multifamily investing in 2022, Dallas, Atlanta, Phoenix, Charlotte, and Denver stand out for their positive demographics, job growth, and limited new apartment supply. With rents rising faster than the national average, these cities should see strong multifamily returns.