A PREA Quarterly analysis quantifies how affordable multifamily properties performed against less affordable multifamily in the NCREIF benchmark over a full market cycle. Using NCREIF property data from 2008 through early 2024, the analysis shows that the most affordable segment consistently outpaced the least affordable segment on total returns and did so with lower cyclicality.
Specifically, the PREA research found that:
- Multifamily properties in the most affordable category delivered higher total returns than the least affordable category on a consistent basis.
- The performance gap held for a sustained stretch from mid 2014 through mid 2022 across multiple market conditions.
- Return premiums in the affordable segment came with lower cyclicality and shallower drawdowns.
Methodology and Context
The Pension Real Estate Association applied its own analysis to NCREIF property level returns from the first quarter of 2008 through the first quarter of 2024, sorting multifamily properties into three affordability categories based on property rent relative to local area median income. Returns, volatility, and cyclicality were then compared across the three categories over the full period and across sub-periods.
