Continuing our look at the best and worst multifamily emerging markets from yesterday, today we’ll look specifically at the multifamily markets around the country with the lowest potential as ranked by our proprietary Multifamily Market Fundamentals scoring algorithm. 

A reasonable question would be to ask what factors these poorly performing markets have in common.   The factor that would most readily be placed at the top of this list is flagging employment growth and rising unemployment; negative employment growth in particular can be a devastating destructor of housing demand.   

The other factor that is most notable about these markets is a very impressive mismatch between supply and demand for housing units; consider post-Katrina Biloxi for example.  GOZONE fueled investor and speculative building has flooded the market with inventory that is competing on the open rental market with established multifamily, and many large condo projects are operating as multifamily systems at this point in time. 

There are other factors of course that are beyond the scope of our discussion here this morning.  The take home point to consider - careful and ongoing analysis of market / community dynamics is critical to your investing success these days.  Several of the markets listed below have been touted by some syndicators and gurus as being “great places to invest” in the past few years - and in fact several of the markets below looked much, much better two years ago.  Times and market conditions are “a changin’”, changing at rates never imagined in the past decade, and must be followed with great care. 

Here are the multifamily markets with the lowest potential for emerging markets investors from our database as of this week –

1) South Bend, IN  51
2) Jackson, MS   52
3) Beaumont, TX   53
4) Biloxi, MS   54
5) Yakima, WA   54

Database Average:  68.2
Database Median:   69

Tomorrow we’ll be back with the single family markets with the highest potential for emerging market investors. 

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