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At 219 closed sales in the quarter, the market has witnessed a dramatic decrease from last year’s frenetic pace of 327 sales in Q3 of 2021.  Still, when viewed over a longer scale, we can’t exactly say volume has fallen off of a cliff.  The quarter witnessed more transactions than the same period in 2020 and almost the same count as 2019 during which we had 222 sales.  Transaction volume will remain a frequently reported measure as the Fed’s tightening cycle continues through the 4th quarter and into 2023.


Sale prices irrespective of income have remained remarkably flat throughout 2022, with the third quarter averaging $532 per square foot and $464K per unit; both all-time high metrics, but barely.  We’ve heard the news from other markets and asset classes about falling prices this year, but so far the physical space in our area is holding value.  The market power scales have certainly tipped into buyers’ favor over the last quarter, but not to the extent that we can declare a downturn in the local market.


Income pricing metrics have begun to move in response to increased interest rates, albeit not exactly in a dramatic fashion.  Average GRMs fell from 18.8 to 18.3 while cap rates rose from 3.6% to 3.7%.  The 2-4 unit section of the market was largely responsible for this move as rates for those loan types are now above 7% in many cases.  A significant mismatch exists in that cap rates are now far below interest rates in almost all cases, perhaps a continued vote of confidence in a supply constrained rental market experiencing double digit rent growth in the face of inflation.


The average number of active apartment building listings in the area during Q4 2022 was 470, up only 10 from 460 in Q3 of the year. These numbers are within the same range we’ve seen over the last 10 years within a surprisingly small range of the mid 400’s. If a dramatic increase in inventory is any indication of an impending crash, like it was in 2008 at 1800 active listings, then we still don’t have the makings of a crisis in the data.

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