Jim Costello with Real Capital Analytics joins Michael to discuss the multifamily investment market. Highlights include:
- Deal volume into 2017 has given up ground, down 26% YTD through April
- Deal volume down 20 mil from 2016 volume of 60 million
- Prices, however, remain high
- Believes this says that sellers are pulling back
- Owners can’t find a reason to sell as can’t replace with a better investment
- There appears to be a disconnect between what buyers will pay and what sellers will sell for
- Garden apartment cap rates have continued to compress as high rise apartments have remained steady
- With interest rates not expected to go lower, cap rates and likewise not expected to go lower, causing buyers to be less aggressive absent potential appreciation from cap rate compression
- Investors, however, remain hungry for yield
- Market seems to be on the “sell high” side of the “buy low sell high” maxim, but then what do you do with the money?
- Doesn’t believe cap rates will return to their long term averages due to vast amount of money worldwide seeking yields