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
Market Data | Oct 23, 2023
New data finds that the majority of renters are cost-burdened
The most recent data derived from the 2022 Census American Community Survey reveals that the proportion of American renters facing housing cost burdens has reached its highest point since 2012, undoing the progress made in the ten years leading up to the pandemic.
Giants 400 | Oct 23, 2023
Top 115 Multifamily Construction Firms for 2023
Clark Group, Suffolk Construction, Summit Contracting Group, Whiting-Turner Contracting, and McShane Companies top the ranking of the nation's largest multifamily housing sector contractors and construction management (CM) firms for 2023, as reported in Building Design+Construction's 2023 Giants 400 Report. Note: This ranking factors revenue for all multifamily buildings work, including apartments, condominiums, student housing facilities, and senior living facilities.
Giants 400 | Oct 23, 2023
Top 75 Multifamily Engineering Firms for 2023
Kimley-Horn, WSP, Tetra Tech, Olsson, and Langan head the ranking of the nation's largest multifamily housing sector engineering and engineering/architecture (EA) firms for 2023, as reported in Building Design+Construction's 2023 Giants 400 Report. Note: This ranking factors revenue for all multifamily buildings work, including apartments, condominiums, student housing facilities, and senior living facilities.
Giants 400 | Oct 23, 2023
Top 190 Multifamily Architecture Firms for 2023
Humphreys and Partners, Gensler, Solomon Cordwell Buenz, Niles Bolton Associates, and AO top the ranking of the nation's largest multifamily housing sector architecture and architecture/engineering (AE) firms for 2023, as reported in Building Design+Construction's 2023 Giants 400 Report. Note: This ranking factors revenue for all multifamily buildings work, including apartments, condominiums, student housing facilities, and senior living facilities.
Senior Living Design | Oct 19, 2023
Senior living construction poised for steady recovery
Senior housing demand, as measured by the change in occupied units, continued to outpace new supply in the third quarter, according to NIC MAP Vision. It was the ninth consecutive quarter of growth with a net absorption gain. On the supply side, construction starts continued to be limited compared with pre-pandemic levels.
Warehouses | Oct 19, 2023
JLL report outlines 'tremendous potential' for multi-story warehouses
A new category of buildings, multi-story warehouses, is beginning to take hold in the U.S. and their potential is strong. A handful of such facilities, also called “urban logistics buildings” have been built over the past five years, notes a new report by JLL.
Contractors | Oct 19, 2023
Crane Index indicates slowing private-sector construction
Private-sector construction in major North American cities is slowing, according to the latest RLB Crane Index. The number of tower cranes in use declined 10% since the first quarter of 2023. The index, compiled by consulting firm Rider Levett Bucknall (RLB), found that only two of 14 cities—Boston and Toronto—saw increased crane counts.
Office Buildings | Oct 19, 2023
Proportion of workforce based at home drops to lowest level since pandemic began
The proportion of the U.S. workforce working remotely has dropped considerably since the start of the Covid 19 pandemic, but office vacancy rates continue to rise. Fewer than 26% of households have someone who worked remotely at least one day a week, down sharply from 39% in early 2021, according to the latest Census Bureau Household Pulse Surveys.
Contractors | Oct 19, 2023
Poor productivity cost U.S contractors as much as $40 billion last year
U.S. contractors lost between $30 billion and $40 billion in 2022 due to poor labor productivity, according to a new report from FMI Corp. The survey focused on self-performing contractors, those typically engaged as a trade partner to a general contractor.
Urban Planning | Oct 12, 2023
Top 10 'future-ready' cities
With rising climate dilemmas, breakthroughs in technology, and aging infrastructure, the needs of our cities cannot be solved with a single silver bullet. This Point2 report compared the country's top cities over a variety of metrics.
