Dive Brief:
- After a spike in the second quarter, apartment sales volume fell 11% to $7.5 billion in July, according to a report that data firm MSCI Real Assets shared with Multifamily Dive.
- Sales volume came in at about half the usual amount of the July average for the five years before the pandemic. It was also dramatically lower than June 2024’s number, which was boosted by New York City-based investment manager Blackstone’s Blackstone Real Estate Partners X’s $10 billion purchase of Denver-based Apartment Income REIT Corp.
- The Real Capital Analytics Commercial Property Price Indices fell 0.7% from June to July and 8.4% year over year. Still, that was an improvement compared to July 2023, when prices fell 13.5%. Cap rates sat at around 5.6%.
Dive Insight:
Mid- and high-rise apartment transactions fell 40% to $3.7 billion in July as cap rates increased from 4.9% to 5.4% over the past year. Sales of garden properties decreased 34% to $3.8 billion as cap rates increased 50 basis points YOY, reaching 5.6%.
Despite some large sales earlier this year, apartment transaction professionals are still in waiting mode, according to Camden CEO Ric Campo on the Houston-based REIT’s second-quarter earnings call earlier this month.
On the transaction side, sellers are waiting for buyers “to throw in the towel and start buying,” according to Campo. On the other hand, buyers are holding out for “the towels to go on sale,” the CEO said.
“While we are certain the waiting will end eventually, the timing is up for debate,” Campo said.
However, some REITs are active in the market. In Q2, Arlington-based AvalonBay Communities sold five properties for aggregate sales proceeds of $514 million. “All of these dispositions were in our established coastal regions, and they [were] priced at a weighted average cap rate of 5.1%, reflecting an average price per home of $475,000,” Matthew Birenbaum, AVB’s chief investment officer, said on the Q2 earnings call last month.
In Q2, AVB bought a 300-unit property in Lewisville, Texas, for $62 million. In July, it 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 activity continues to move us closer to our long-term portfolio allocation goals of having 25% of our portfolio in expansion regions and 80% in suburban submarkets,” Birenbaum said.
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