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Multifamily Investment Market Continues Slowdown

SAN DIEGO-For the second consecutive quarter, the apartment market sees its sales decline. The volume of apartment properties changing hands is down 24% from the same time a year ago.

By Daniel D. Williams | Updated on August 09, 2005

(To read more on the multifamily market, click here.)

SAN DIEGO-The numbers are in and it’s a fact: the apartment investment market is slowing. Now, the question becomes, how long will it last?A recent report by Burnham Real Estate shows that apartment sales have slumped for the second consecutive quarter. Both the number of units sold and the total volume of apartments changing hands are off, from the same time a year ago.”This is a temporary and necessary market correction in a market where a shortage of affordable for-sale housing to meet demand will continue to support a very strong apartment market,” says George Carlson, vice president and apartment specialist with Burnham Real Estate. Carlson says that market fundamentals helped drive up the present condition. Apartment values increased by as much as 50% over the past year, “while rents rose by just 3%,” Carlson adds.In all, the area experienced 265 apartment property sales during the second quarter. That figure was off 24.3% from the same time a year ago, when 350 apartments changed hands. The total number of units sold were off as well, dropping from 6,291 units during the second quarter last year to only 3,557 units sold in the second quarter this year. Overall, sales are off 24.7% for the year, with 509 properties sold, compared to 676 properties sold at mid-year of 2004.If there is a silver lining, activity among small units – those with three-to-four-unit projects – are moving rapidly. “During the second quarter of this year, there were 124 sales of these smaller projects involving 442 units, a 33% increase over the previous quarter when there were 94 sales of projects totaling 332 units,” says Carlson.

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