Home News Apartment Investment Sales Grind To A Halt As Capital Costs And Vacancies Rise

Apartment Investment Sales Grind To A Halt As Capital Costs And Vacancies Rise

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Williamsburg, Brooklyn apartment complex

U.S. multifamily property sales essentially collapsed in the third quarter of 2022, according to the U.S. National Housing Council Quarterly condominium market survey.

NMHC Chief Economist mark oblinsky Rising costs of debt and equity, as well as general economic uncertainty, were cited as factors for the slowdown. The study also reported higher vacancy rates and slower rent growth compared to the second quarter.

“This has effectively brought the market for apartment deals to a halt as buyers demand higher rates of return and sellers are unwilling to respond with lower prices.” Obrinsky said in a statement.

Multi-family sales transactions nationwide fell 17% in the third quarter, according to the company. MSCI The data are still up 25% year-to-date through 2021, reflecting strong sales in the first half of 2021.

“We are one of the bystanders. [of] Pricing and cap rate” Vicky Randy Wilbon, President of Integral Group, said: in the meantime Bisnows Southeastern Multifamily Annual Conference in Atlanta in October.

With the Federal Reserve poised to announce its latest rate hike on Wednesday, the cost of money will soon rise even higher, perhaps another 0.75 percentage points. So far, the central bank has raised its benchmark short-term interest rate by 3 percentage points since March.

NMHC conducted the survey from Oct. 17 to Oct. 24, with responses from 268 CEOs and other senior managers of apartment specialists nationwide.

The survey is based on four metrics produced quarterly by NMHC, including market tightness, sales volume, equity finance and debt finance, each on a scale of 0-100, with results below 50 previously reported. Indicates a lower level of trading than

The latest volume index was 6, marking the fourth consecutive quarter of volume declines. Eighty-nine percent said their sales volume decreased compared to the second quarter, and only 1% reported an increase in sales volume compared to the previous quarter.

The sales volume index is at its lowest point since the first week of 2019. pandemic Since the survey began in 1999, it has fallen below this low only twice.

The Equity Financing Index was 12 and the Debt Financing Index was 5. Only 3% of respondents said their debt financing situation had not changed, and no one said their situation had improved in the past three months.

The market tightness index was 20, the highest of the four. Sixty-six percent of his respondents reported that the market was looser than in the second quarter, and 29% believed the situation had not changed.

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