To maximize investment returns in the multifamily property market, consider investing in suburban areas as they have shown better market performance and investment returns. Also, consider smaller metros with a population under 2 million. Be aware of local regulations, as they can significantly impact investment, as seen in the New York Metro's drop in multifamily investment due to new rent control regulations.
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Because of slower economic growth in 2022 and 2023, apartment demand in the U.S. is projected at 240,000 units in 2020. Millennials continue to move into homeownership at a modest pace due to affordability issues, but multifamily demand remains sufficient enough. New York Metro's 9.2% year-over-year (YoY) drop in multifamily investment was partly caused by the implementation of new rent control regulations. Greater Los Angeles had a 9.8% drop in investment YoY, but the San Francisco Bay Area had a 7.4% increase. Buying or building in the suburbs remains the best bet based on market performance and investment returns. Investors and developers should consider smaller metros – under 2 million population.