SoCal Multifamily Sales Pulse - July 24, 2022 - July 30, 2022

• 07 August 2022
• Mike Lembeck

Disclaimer: All information contained herein is obtained from sources believed reliable. We have not verified it and make no guarantee, warranty or representation about it. Any projections, opinions, assumptions or estimates used are for example only. We make no claim(s) as to the accuracy or reliability of the information presented. If you wish for us to analyze your specific property or situation please feel free to call or email us anytime.

---

Here's What's Happening In The Market, Here’s What This Means For You

Sharply Climbing Long-Term Yields Put Buyers And Sellers On Notice

A clear bid/ask gap between buyers and sellers is chilling sales activities, as sellers seek the price attainable last year, while buyers expect a discount because of a higher cost of debt. The CRE market has seen a significant slowdown in transaction volume over the last couple months and the trend is expected to continue until there are signs of stability from the Fed. 

Mortgage rates fall sharply after negative GDP report and Fed’s latest hike. The average rate on the popular 30-year fixed mortgage fell to 5.22% on Thursday from 5.54% on Wednesday. The rate fell even further Friday to 5.13%. 

U.S. Foreclosure activity sets post pandemic highs in first quarter of 2022. Foreclosure starts, bank repossessions at highest numbers in two years, but still well below normal levels. 

The number of foreclosure starts is up 219% since the start of the year, according to real estate data analytics firm ATTOM Data Solutions’ midyear 2022 U.S. foreclosure market report. And when it comes to the number of foreclosure starts, California topped the list.

According to new research from the National Multifamily Housing Council and National Apartment Association the US will need more than 4.3 million new apartments by 2035. Texas, Florida and California account for 40% of future demand and will collectively require 1.5 million apartments by 2035.

Bill Doyle, co-founder and managing director at Equity Oak Ventures, said that investors who purchased property three years ago and are looking to roll over financing are getting one-year extensions from their lenders. The next 90-120 days will be very telling in the debt market for existing mortgages that need to be extended or refinanced or will we see keys handed back?

DIRE FED WARNING: The Federal Reserve Bank of Minneapolis CEO and President Neel Kashkari said Sunday that the current state of inflation is "very concerning" and "spreading out more broadly across the economy."

Slowing construction will likely keep multifamily supply and demand in balance for some time despite fears of a recession, according to some analysts. “Even if multifamily demand cools, limited multifamily construction will help sustain the sector.”

Dianne Crocker, a principal analyst at LightBox states that deal activity is weighted to larger deals more suitable for the institutional buyer with equity to deploy. The thinning of buyer pool is evident as higher rates impact access to debt capital. But bad news can mean good news for some. This could present some attractive acquisition opportunities for investors that have the capital available. 

With the recent market changes and properties taking longer to sell and with more competition for investor dollars, I expect the RE/MAX Commercial Auction Program to become a lot more beneficial for sellers looking to compete in this market. This is a program that allows sellers to get both local and worldwide exposure of their property, maximize sale proceeds and do so with little or no fees. Let me know if you’d like more information on this program. 

 As always, feel free to give me a call or send me an email with any questions on the market. Let me know if you’d like to have me analyze your situation and property to help determine your equity position for a potential sale or 1031 exchange.

<< Back

---

Comments

No comments.

Register here or Login here to be able to add comment.