Apartment sales activity

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Dupre + Scott Apartment Advisors, Inc

Apartment investors have already bought more than $2 billion of apartments in the region this year. That’s already the fifth best year on record and there are more than two months left. So why are we troubled by the amount of sales activity this year?

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We usually talk about trends for 20-unit and larger apartments. But there are a lot more investors involved in smaller rental properties like single-family rentals, multiplexes, and 5 to 19 unit apartment buildings. This spring we surveyed just over 2,200 20-unit and larger properties for our Apartment Vacancy Report and more than 6,400 smaller properties for our 1-19 Unit rent & Vacancy Report. So this week we will talk about some of the trends we found in King County from our smaller property survey.

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According to the two finest philosophers of the past 100 years, when you are negotiating to buy an apartment building you have to decide on one of two strategies. The philosophers, Jagger & Richards in their 1968 treatise, “Let it Bleed”, identified the “Get what you want strategy” and suggested an alternate “Get what you need strategy.” Let’s start with the “get what you want” strategy.

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We take a look at migration trends every month. They are important to our region's housing market so it pays for investors to keep tabs on what's happening. And month after month we have been reporting better news than the month before. You have to start wondering when the good news will stop. Well, maybe this is the month. There is good news. A lot of it. But we’ve found some bad news too. First, let’s look at the good news.

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A lot of investors are bullish on our region’s apartment market. They have seen rents climb over the past few years and expect more of the same. Others are worried that new development will increase vacancies and lower rents and values. The key is for investors to look at all of the inflationary and deflationary trends in the market, not just the one thing they might be fixated on today. It’s like the Patriots letting air out of footballs. Let's see how.

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