An apartment complex in Alameda County which was transferred via a number of partial interests. We prevailed following a hearing.
Softening in both the economy and labor markets, as well as rising inflation, and rising interest rates are all factors which have affected a number of multi-family residential markets in 2023. As of late 2022, economists anticipated market adjustments for residential property. The California Association of Realtors issued a press release in October 2022 discussing the market stating “Market shift under way as mild recession and higher interest rates cut into housing demand.” Economists of the N.A.R. elaborated further as follows:
“The baseline scenario of C.A.R.’s 2023 California Housing Market Forecast sees a decline in single-family home sales of 7.2 percent next year to reach 333,450 units, down from the projected 2022 sales figure of 359,220. The 2022 figure is 19.2 percent lower compared with the pace of 444,450 homes sold in 2021.”
While it is true that economic influences often do not affect multi-family and single family home values and trends in the same way, the anticipation of recessionary market conditions would be a concern to multi-family property owners, builders, buyers, and sellers in many markets. A shift in market conditions has the potential to affect rents, vacancy, capitalization rates, and overall risk.
Director, Valuation Services