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Multifamily Investment Sales Plunge 71% In January


Multifamily investment sales nationwide cratered in January 2023 compared with a year earlier, dropping 71% to a total of $6.2B, Multifamily Dive reports, citing MSCI data. Investors pulled back because of the higher cost of capital, combined with dropping demand for apartments among renters.

About $2.5B in high-rise apartments and $3.7B in garden-style apartment assets traded in January, with both totals representing double-digit year-over-year declines, according to Multifamily Dive.

Compared with the average sales volume during the five years before the pandemic, high-rise sales were off 33%, while garden-style properties sales were down 59%.

As demand among investors dropped during January, so did asset prices. Apartments posted the largest price declines of any property segment year-over-year in January, as well as month-over-month, according to MSCI. The company's apartment index fell 4.6% in January compared with a year earlier and 2.8% compared with December 2022.

Overall, sales of U.S. CRE totaled less than $20B in January, the fifth-weakest start to a year since 2005, reports MSCI.

A January 2023 survey of CRE investment sales brokers by Berkadia found that they expect the multifamily sector to show some resilience this year.

Even so, 54% of respondents said that rising interest rates and persistent inflation, coupled with recession fears, would impact multifamily sales “extremely,” while 45% said that economic trends would impact the market “moderately.”