Multifamily Expenses Remain High
Multifamily expenses continue to grow, with property insurance topping the list. According to a new study from Yardi Matrix, overall expenses per multifamily unit nationwide increased 7.1% to $8,950 as of January.
Yardi Matrix analyzed more than 20,000 properties that use Yardi operating software to gain more insight into the cost increases. Property insurance costs per unit increased year over year on average by 27.7% in the 12-month period ending in January, followed by marketing expenses, 12.3%; administrative, 9.6%; and repairs and maintenance, 8.8%.
According to Yardi Matrix, total expenses have increased rapidly in the past two years driven by inflationary measures and peaking at 8.7% in 2022. Prior to that, the annual average expense growth rates were 4.9% in 2021, 1.6% in 2020, 3.6% in 2019, and 3.8% in 2018.
While total expense growth is starting to decelerate, insurance costs remain high, rising 129% since 2018 to an average of $636 per unit nationwide. In 2018, premium growth rates were at 5.6% and then hovered between 13.4% and 16.7% between 2019 and 2022. Insurance costs are having an impact across the nation; however, the costs are escalated in the Southeast and other areas impacted by weather-related damage. In some cases, it has become more difficult to obtain insurance.
Despite the growth in expenses, Yardi Matrix noted profitability at multifamily properties was up in the 12 months ending in January because gross income rose more than expenses.