NMHC routinely fields the question about why apartments are a good investment and how apartment are expected to perform in the future.  This section is an overview of the apartment sector as an investment option.

The returns on investments in apartments may exceed or fall short of those of the past. But demographic trends suggest that demand for apartment living should continue to grow moderately. Furthermore, compared to other property types, apartments have shorter average development periods, which makes it easier for supply to adjust relatively quickly to changing demand, which in turn reduces the amplitude of building cycles. Finally, rent control and other forms of regulation of rental housing are less extensive in the United Statesthan in many other countries.

There were 17.6 million apartment residences in 2006. The value of these apartments was a combined $1.87 trillion at year-end, an all-time high. The total value of all apartments increased at a compound annual growth rate of 7.5 percent from 1990-2006, a period that included two recessions.

• Apartment Stock and Value
• Total Annual Returns
• Total Annual REIT Returns

Multifamily rental housing can be an attractive opportunity for large institutional investors worldwide seeking to place funds in income-producing real estate in the United States.

Apartments account for approximately one-fourth of the nation's stock of income property.

Direct investments in multifamily rental housing have historically provided competitive returns relative to the other major property types -- office, retail, and industrial.

• Among the portfolios of pension funds and other large investors, apartments during the period 1984-2004 provided a higher total return, with less variance, than the average for all property types, according to data from the National Council of Real Estate Investment Fiduciaries (www.ncreif.org).

• Over this period, apartments averaged a 9.3 percent total annual return, compared to 7.6 percent for all property types combined.

Multifamily rental housing can be an attractive opportunity for large institutional investors worldwide seeking to place funds in income-producing real estate in the United States.
 
Apartments account for approximately one-fourth of the nation’s stock of income property.
 
Direct investments in multifamily rental housing have historically provided competitive returns relative to the other major property types – office, retail, and industrial.

• Among the portfolios of pension funds and other large investors, apartments during the period 1990-2012 provided a higher total return, with less variance, than the average for all property types, according to NMHC tabulations of data from the National Council of Real Estate Investment Fiduciaries (www.ncreif.org).
• Over this period, apartments averaged a 8.8 percent total annual return, compared to 7.3 percent for all property types combined.

For more information, contact NMHC's Chief Economist, Mark Obrinsky at mobrinsky@nmhc.org.