Strong supply pipelines cloud outlook for D.C. & Miami

Multifamily is set to be a top-performing sector over our five-year forecast, but returns will differ significantly across the 17 metros in our coverage. Miami and D.C. are likely to struggle as persistent strong supply weighs on NOIs and values, limiting total returns to around 3% p.a. (See Chart 1.) San Francisco, Boston, and Portland are not expected to fare much better. Most other markets should deliver solid returns, supported by moderating new supply and sustained demand as for-sale housing remains highly unaffordable. We expect southern metros such as Houston, Dallas, and Atlanta to perform best, driven by robust rental growth of roughly 4% p.a. and capital value gains, producing total returns above 8% p.a.