As Apartment Cap Rates Fall, Market Heats Up

Source: Multifamily Executive

Multifamily Executive reports: The multifamily acquisition market has been building momentum in the second quarter, with cap rates declining on a national level and the gap between buyers and sellers narrowing. Frenzied bidding has some long-term holders debating their strategy.

Typical sellers in the past two years seemed to be only those who had to sell. Many owners who bought at the height of the market have remained on the sidelines, not listing their properties due to the perception that rents and values will escalate two years from now.

But among longer-term holders, there’s been a shift in attitudes in the past 90 days. The bidding on high-quality multifamily assets has become so fevered that owners are beginning to ask themselves if now really is such a bad time to sell.

“For quality assets, there’s intense competition, and cap rates are declining because of these assets,” says Ben Thypin, senior market analyst at global market research firm Real Capital Analytics. “Owners see this cap rate environment, and the financing environment with Fannie and Freddie, and think that maybe this is a good time to get out and capture some of this unique pricing environment.”

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