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Some strategies for mitigating risks in the multifamily property market include diversifying investment locations, focusing on markets with strong demand and stable growth, and considering smaller metros with a population under 2 million. It's also beneficial to invest in suburban areas, which often offer better returns. Additionally, staying updated with regulatory changes, such as rent control laws, can help investors make informed decisions.
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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.
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