Market Recap for 10 plus unit Apartments Properties, 4th Quarter

apartment_buildings

While last year saw somewhat tepid sales volume in the larger properties when analyzing the county MLS services and another public provider of sales transactional information compared to recent previous periods, the actual sales volume figure is likely higher when considering “off market” activity as a “silent” sale where one brokerage firm likely represents both buyer and seller by putting together the property and buyer.

At least, in terms of publicly-listed sales, the pricing metrics clearly showed a dramatic improvement over the entire period since the initial signs of the Great Recession in 2008 – both in terms of average per-unit prices and GRMs.  the average per-unit prices and GRMs.  The average per-unit pricing came close to $200,000 ($192,639) and the average GRM reflected was approximately 11.3.  Geographically, the cities seeing the most sales velocity include Oxnard (33+% of the total), Ventura (close to 30% of the total), and Santa Paula (18.8% of the total) — those same cities comprise the “lion’s share” of the multifamily properties in Ventura County.

This greatly improved market dynamic has likely been enhanced most from the environment caused by a combination of the investor community’s unfaltering confidence in the rental market and the availability of more investment money than available for-sale inventory.  This condition has manifested into a very lean for-sale inventory market – although not driven to the point of causing “market exuberance”, it has certainly placed upward pressure on market values.  This strength in sales velocity has been buoyed most clearly by the low-interest rate environment – the investment community has found it can still pay more for properties as long as the cost of the debt offsets the increased cost of the asset acquired.

For that reason, the continued health of the market will likely be affected most by when and to what extent interest rates rise in the future.  Only time will tell whether the shorter-term fixed rate loans of 5,7 or 10 years characteristically used in these larger properties could ultimately hide fundamentals that may, ultimately, not support the pricing of the asset prices paid.

For more information regarding the current status of the market for all multifamily properties, contact Craig Lieberman, CCIM.   Craig@ais-realestate.com.  Craig is the President, Broker and Managing Director of The Apartment Investment Specialists, a multifamily property brokerage and property management company located along the central coast.