Why Multifamily Investment Is A Good Hedge Against Inflation

Posted on June 28, 2022

Newsletter with a Real Estate article circled with a red marker - magnifying glass, red marker and eyeglasses on top of paperGrowing inflation is a big concern for all types of investors right now, as the rising pricing tide not only erodes purchasing power, it also diminishes returns. The good news is that real estate has historically outperformed during periods of high or rising inflation. The news gets even better when you invest in the booming multifamily investment sector and have a sound, time-tested approach like that of CGI+ Real Estate Investment Strategies.

While it remains to be seen whether high levels of inflation will continue or recede in general as the Fed raises interest rates, multifamily investment offers specific and substantial advantages now that serve as a reliable hedge. Housing supply and demand dynamics favor owners from both the standpoint of continued shortages in overall U.S. supply and lifestyle preferences, including renters demanding quality amenities without the maintenance burden. As a result, rent growth has stayed strong, with only one of the top 30 U.S. metros experiencing rent growth below 8.7%, according to Yardi Matrix.

Those powerful multifamily dynamics not only favor apartment owners and investors in the income-producing category, they also boost overall property values. Freddie Mac recorded multifamily price appreciation of 19.6% in 2021.

Most of us still remember one of dad’s first investment lessons (after ‘save your money!’): make your money work for you. Money not working is getting worked as inflation — the Consumer Price Index rose 8.6% over the last 12 months — eats away at its value. Multifamily investment, fueled by favorable supply and demand dynamics and more, serves as an excellent hedge against inflation.

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