The Buckingham Investments Q3 2019 market study has been released! This information is crucial for keeping up to date of the local market and I am excited to offer the data to all of my clients and extended network.
Each quarter we review all the closed multifamily sales in our market area, verify the numbers and compile the data. For a detailed spreadsheet version of this study that shows neighborhood and property level data, please respond to this email. I hope that this market study proves to be a valuable resource for you.
So, what do these numbers mean?
The 3rd quarter of 2019 saw some interesting data in our local multi-family market. Sales volume remained mostly consistent from the second quarter and with historical trends. Average gross rent multipliers (GRM) fell from 17.3 in Q2 to 16.3 in Q3 and cap rates rose from 4% in Q2 to 4.2% in Q3. Despite this erosion in income pricing, actual sales prices increased. Average price per square foot rose from $391 in Q2 to $399 in Q3. With these two metrics trending in counter-intuitive directions, only one explanation makes sense: rents on sold buildings were higher per square foot in Q3 vs. Q2. There could be a variety of explanations behind this, one of which being that sellers had increased rents in anticipation of rent control policies advancing at state and local levels in California.