As always exhibited in the multifamily property market, these smaller units overwhelmingly comprise the majority of multifamily property sales (80%) compared to 5-9 units and 10+ unit sales, which comprise 11.7% and 8.3%, respectively, of total sales volume. This second half of the year also exhibited a clear trend towards a disproportionate share of non-distressed sales (77%), the pattern of which seemed to originate sometime in the second half of last year after years of distress seen during the Great Recession.
What was also clearly exhibited in sales statistics was an overall increase in pricing metrics, whether the sales were under distress of not – the increase of which was seen in per-unit prices and GRM – which one can infer that buyers were willing to pay more for less income. The reason was clearly the lower interest rates available across the board for income-producing properties. In other words, all things being equal, an investor could afford to pay more for a property than was previously acceptable to the investment community because the cost of debt generated the same or more income to the buyer.
In terms of sales volume between duplexes, triplexes and fourplexes, duplexes clearly saw the most activity at close to 2/3 of the sale volume occurring in this property genre. This clear “winner” surely benefited, as always, by the number of buyers that acquire these properties with the intent to use them as primary residences supported financially by the rent from the adjoining unit. Triplexes and fourplexes equally split the remainder of the sales volume of these smaller apartment investment properties.
For more information regarding the current status of the market for these smaller multifamily units as well as all multifamily properties, Contact Craig Lieberman, CCIM, Apartment Investment Specialists, Craig@ais-realesatate.com