Overall expenses per multifamily unit rose to $8,950, a 7.1% increase year-over-year (YOY) as of January 2024, according to an examination of more than 20,000 properties analyzed by Yardi Matrix.
According to the March 2024 Matrix Research Bulletin for Multifamily Expenses, expense growth for multifamily properties was led by property insurance (up 27.7% YOY), marketing (12.3%), administrative costs (9.6%), and repairs and maintenance (8.8%).
Driven by inflationary pressures, total expenses at multifamily properties have “increased rapidly” in the past two years, peaking at 8.7% in 2022, the report states. This is compared to the average annual expense growth of 4.9% in 2021, 1.6% in 2020, 3.6% in 2019, and 3.8% in 2018.
Multifamily Expenses Rising, Led by Insurance
Insurance costs per unit continue to rise, and have increased 129% nationally since 2018. The current property insurance costs per unit are now at an average of $636.
While property insurance makes up just 7% of total expenses for properties, it's becoming a growing concern especially in the Southeast and other regions prone to severe weather events. In these high-risk areas prone to hurricanes, floods, and fires, obtaining insurance is becoming increasingly difficult.
The study showed that multifamily properties were still profitable in 2023, despite rising expenses. This is because income growth outpaced expenses. On average, gross income per unit increased by $1,056 nationally, while expenses only grew by $593, resulting in a $463 increase in net operating income (NOI).
Yardi Matrix forecasts that asking rents will increase by 1.8% during 2024, and we can expect renewal rent growth will continue to decelerate.
Related Stories
Codes and Standards | Jul 17, 2023
Outdated federal rainfall analysis impacting infrastructure projects, flood insurance
Severe rainstorms, sometimes described as “atmospheric rivers” or “torrential thunderstorms,” are making the concept of a “1-in-100-year flood event” obsolete, according to a report from First Street Foundation, an organization focused on weather risk research.
Multifamily Housing | Jul 13, 2023
Walkable neighborhoods encourage stronger sense of community
Adults who live in walkable neighborhoods are more likely to interact with their neighbors and have a stronger sense of community than people who live in car-dependent communities, according to a report by the Herbert Wertheim School of Public Health and Human Longevity Science at University of California San Diego.
Multifamily Housing | Jun 29, 2023
5 ways to rethink the future of multifamily development and design
The Gensler Research Institute’s investigation into the residential experience indicates a need for fresh perspectives on residential design and development, challenging norms, and raising the bar.
Apartments | Jun 27, 2023
Average U.S. apartment rent reached all-time high in May, at $1,716
Multifamily rents continued to increase through the first half of 2023, despite challenges for the sector and continuing economic uncertainty. But job growth has remained robust and new households keep forming, creating apartment demand and ongoing rent growth. The average U.S. apartment rent reached an all-time high of $1,716 in May.
Contractors | Jun 26, 2023
Most top U.S. contractors rarely deliver projects on time: new study
About 63% of leading U.S. contractors are delivering projects out of schedule, according to a survey of over 300 C-suite executives and owners in the construction industry by XYZ Reality. The study implies that the industry is struggling with significant backlogs due, in part, to avoidable defects, scan, and rework.
Industry Research | Jun 15, 2023
Exurbs and emerging suburbs having fastest population growth, says Cushman & Wakefield
Recently released county and metro-level population growth data by the U.S. Census Bureau shows that the fastest growing areas are found in exurbs and emerging suburbs.
Contractors | Jun 13, 2023
The average U.S. contractor has 8.9 months worth of construction work in the pipeline, as of May 2023
Associated Builders and Contractors reported that its Construction Backlog Indicator remained unchanged at 8.9 months in May, according to an ABC member survey conducted May 20 to June 7. The reading is 0.1 months lower than in May 2022. Backlog in the infrastructure category ticked up again and has now returned to May 2022 levels. On a regional basis, backlog increased in every region but the Northeast.
Industry Research | Jun 13, 2023
Two new surveys track how the construction industry, in the U.S. and globally, is navigating market disruption and volatility
The surveys, conducted by XYZ Reality and KPMG International, found greater willingness to embrace technology, workplace diversity, and ESG precepts.
| Jun 5, 2023
Communication is the key to AEC firms’ mental health programs and training
The core of recent awareness efforts—and their greatest challenge—is getting workers to come forward and share stories.
Mass Timber | Jun 2, 2023
First-of-its-kind shake test concludes mass timber’s seismic resilience
Last month, a 10-story mass timber structure underwent a seismic shake test on the largest shake table in the world.
