Apartment Transaction Demand Resilient Despite Softening Market

SAN FRANCISCO-Bay Area apartment vacancy edged up and rental rates fell slightly in the first quarter as no signs of a near-term economic recovery showed up on the horizon, according to the latest report from the brokerage firm Marcus & Millichap.

Marcus & Millichap Regional Director Jeff Mishkin tells GlobeSt.com the biggest story of the past 18 months in the Bay Area apartment market has been the resilience of transaction demand and the strength of sales prices in the face of a softening market.

The demand is being driven by record low interest rates and the poor performance of alternative investments. Mishkin says the only thing that has changed is that the continued economic downturn is beginning to raise vacancies and affect properties’ income, making buyers a little more wary of overpricing because it’s clear that rental rate growth may no longer be an easy option for increasing income after an acquisition.