Owning an apartment building? It’s getting more expensive, a challenge that multifamily owners should expect to face throughout the rest of 2024.
That’s the key finding from a Yardi Matrix special report released April 3.
According to the report, the expenses of owning multifamily properties rose by 7.1%, or an average of $593 a unit, on a year-over-year basis as of January of 2024. Yardi Matrix reported that multifamily owners spent an average of $8,950 on annual expenses, such as insurance payments and maintenance, from January of 2023 to January of 2024.
In a bit of good news? While expenses continue to increase, they are growing at a slightly slower pace. Yardi Matrix reported that annual expenses rose 8.7% from 2021 to 2022. That’s higher than the 7.1% year-over-year increase recorded from 2023 to 2024.
Expense growth varied by expense type and metropolitan area.
The cost of property insurance recorded the biggest jump, with Yardi Matrix reporting that this expense increased by 27.7% year-over-year. Next came marketing expenses, which jumped 12.3%; administrative expenses, which increased by 9.6 percent; and the cost of repairs and maintenance, which jumped 8.8%.
Of the 129 markets reviewed by Yardi Matrix, 99 recorded increases of 5% or more and 28 had increases of 10% or higher.
The markets seeing the biggest jumps in multifamily ownership expenses were Spokane (18.9%); Tallahassee (18.8%); Lafayette, Louisiana (18.1%); Portland, Maine (14.7%); and Pensacola, Florida (14%). Property owners in the Midwest and Texas can at least celebrate that their operating expenses aren’t rising as high as they are in other markets.
The Southeast region of the country recorded the largest increase in costs, up 8.8%. Next were the West (7.3%), the Midwest (6.4%), the Southwest (6%) and the Northeast (4.7%).
By market size, tertiary markets posted the largest increase (7.9%) followed by secondary markets (7.1%) and gateway markets (5.4%).
Yardi Matrix analyzed nearly 22,000 properties that use Yardi software in preparing its costs report.
