MSCI: Prices for multi-family homes fall by 8.4% y/y

Diving certificate:

• After a jump in the second quarter, home sales volume fell 11% to $7.5 billion in July, according to a report provided to Multifamily Dive by data firm MSCI Real Assets.
• Sales volume was about half the usual July average of the five years before the pandemic. It was also dramatically lower than the June 2024 figure, which was boosted by New York City-based investment manager Blackstone Real Estate Partners X's purchase of Denver-based Apartment Income REIT Corp. for $10 billion.
• Real Capital Analytics' commercial real estate price indices fell 0.7% from June to July and 8.4% year-over-year. Still, this was an improvement from July 2023, when prices fell 13.5%. Capitalization rates were around 5.6%.

Diving insight:

Transactions for mid- and high-rise apartments fell 40% to $3.7 billion in July as capitalization rates rose to 5.4% from 4.9% last year. Garden property sales fell 34% to $3.8 billion as capitalization rates rose 50 basis points year-over-year to 5.6%.

Despite some big sales earlier this year, real estate transaction professionals are still in wait mode, said Camden CEO Ric Campo at the Houston-based REIT second quarter earnings call Beginning of the month.

On the transaction side, Campo said, sellers are waiting for buyers to “throw in the towel and start buying.” On the other hand, buyers are waiting for “the towels to go on sale,” the CEO said.

“While we are confident that the wait will eventually end, the timing is still controversial,” Campo said.

However, some REITs are active in the market. In the second quarter, Arlington-based AvalonBay Communities sold five properties for total proceeds of $514 million. “All of these disposals were in our established coastal regions, and they [were] “The price is at a weighted average capitalization rate of 5.1%, which equates to an average price per home of $475,000,” said Matthew Birenbaum, AVB’s chief investment officer. to the second quarter conference call last month.

During the second quarter, AVB purchased a 300-unit property in Lewisville, Texas, for $62 million. In July, the company acquired two more assets in its expansion markets – a 252-unit property in Morrisville, North Carolina, for $67 million and a 306-unit property in Edgewood, Colorado, for $95 million.

“Our asset trading activities bring us closer to our long-term portfolio allocation goal of having 25% of our portfolio in expansion regions and 80% in suburban submarkets,” Birenbaum said.

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