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Reflecting on 2021 and embarking on 2022

As we step into the new year it is naturally time for reflection on the events of the past year, and time to plan for what is to come in 2022. 

Despite vaccine rollout, supply chain snags, and the delta variant, 2021 was a great year to be a multifamily investor. Demand for housing significantly outweighed new deliveries and this caused national vacancy rates to fall by 1.5% year-on-year. Average rents today exceed pre-crisis levels, and markets that are experiencing high inbound migration have seen rent growth of more than 25% in the past year.

Multifamily investments increased 31% in Q3 alone, as institutional, and private investors alike sought to deploy capital in real estate and cap rates across all asset classes have compressed, as investor demand for real estate continues to drive up asset prices.

It has been an amazing year for Equity Yield Group and its investors. On our portfolio, we have seen rent increases of over 27%, far exceeding our underwritten proforma rents. We continue to receive unsolicited offers to purchase properties we acquired earlier this year, for over 30% more than what we paid for them. However, we believe strongly in the markets that we are buying in and for now we see more benefit for our investors to hold and execute on our business plans.

We may not have a crystal ball, and there is certainly no way to tell what 2022 has in store for us, but the beauty of real estate investment is that it is opportunistic in nature. There will always be investment opportunities in real estate for those willing to put in the work and seek them out. 

Our focus in 2022 is to provide investors with great risk adjusted investment opportunities, holding true to the fundamentals of real estate investment: Acquiring properties with superior locations, in strong markets with population growth, income growth, job growth, a diverse employment base as well as favorable absorption to new delivery ratios. We will continue to seek properties with a value-add component, allowing us to force appreciation through property renovations and improving operational efficiencies.

No one can say for certain if the real estate market will exhibit the same strong growth in 2022, but many of the same factors driving 2021 growth will still exist. The supply chain issues slowing new construction and increasing cost of new housing does not show any signs of resolution in the near future. Lack of supply combined with inflation will continue to increase the barriers to home ownership, further pushing rents and occupancy. 

As employees unchained from their desk continue to migrate to the sunbelt, population growth puts further demand pressure on housing markets across the Southeast, Texas, and Arizona. Although the Fed is planning to raise rates in 2022, debt will remain available and relatively inexpensive, and this, combined with an unprecedented level of private capital looking for returns will provide plenty of liquidity for the real estate market.

On December 15th, we closed on our final acquisition for the year – Shoreview Apartments. A stunning 2021 built 216-unit multifamily community in Bradenton, FL. We would like to give a special thanks to all our investors who chose to partner with us on this investment and those that partnered with us on our other investments in 2021.

Although I am admittedly biased toward multifamily real estate, I believe that 2022 will be another great year for multifamily investors. I wish everyone the best in 2022 and look forward to partnering with you on one of our 2022 projects!

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