Despite the COVID-19 pandemic, the multifamily sector remains a solid investment choice in many parts of the United States. Cushman & Wakefield reported that all of their offices throughout the country have seen many multifamily loan requests and lenders have continued to provide construction loans for projects, indicating that multifamily remains strong.
What are the top multifamily markets investors should focus on in 2021?
Marcus & Millichap's 2021 U.S. Multifamily Investment Outlook assessed net migration from 2016 through 2020 and found that the metro areas with the highest gains included the following:
1. Dallas/Fort Worth, TX According to Norada Real Estate Investments, 340 people move to the Dallas-Forth Worth area every day. Renting is more affordable for many than buying, leading Dallas to have the lowest homeownership rate in the country. The population is growing rapidly and is expected to double in the next 15 years.
2. Phoenix, AZ
Norada Real Estate Investments also projects strong growth for Phoenix, Arizona. The median sales price in 2020 was $309,990, up by + 12.7% from 2019, and the Covid-19 pandemic didn’t bring a decline in sales prices.
3. Atlanta, GA Atlanta’s population has grown by over 14 percent in the last 10 years. With properties starting at only $70,000 and median rental prices at $1,500 per month, Atlanta proves to bring a strong return on investment.
4. Tampa-St. Petersburg, FL Tampa has a population of over four million and is a popular tourist destination. Additionally, the cost of living in Tampa is 5% below the national average, making residents more likely to increase their rental budget due to the cheaper cost of living.
5. Houston, TX Marcus & Millichap reported that Houston will gain 14,600 suburban rentals in 2021. Houston has seen Strong underlying migration and household creation trends in these markets, particularly in the suburbs, which should help demand keep pace with supply. Properties trade for close to $120,000 per unit, on average.
6. Austin, TX
Austin has been among the fastest-growing cities in terms of job growth and employment and is expected to see 11,400 suburban rentals in 2021. Additionally, Austin has seen some of the highest construction activity in the nation, which also indicates the strength of Austin’s market.
7. Seattle-Tacoma, WA
Families are drawn to Seattle’s lifestyle and the city tends to attract longer-term renters. Additionally, Seattle is a popular tech center for companies such as Facebook, Google, Amazon, and more, attracting high-earning residents who can afford rising rents.
8. Charlotte, NC
Marcus & Millichap reported that appreciation has been exceptionally strong in Charlotte, with over 25% pricing increases over the last three years. Charlotte offers affordable real estate and a 6% increase in average rent compared to last year at $1,259 per month.
Where else should investors consider?
In addition to the markets mentioned above, according to CBRE, investors should focus on suburban assets in the Southeast and Midwest regions of the United States when seeking investment opportunities with strong market performance in 2021. These regions include:
Indianapolis
Memphis
Detroit
Columbus
Cleveland
Cincinnati
Kansas City
Louisville
Saint Louis
Greensboro
Jacksonville
Richmond
Virginia Beach
Raleigh
Denver