Apartment Capital Market Update, Q4 2019

National Cap Rate Trends

 

National Apartment Market: Cap Rate Trends, 2014 Q4 – 2019 Q4

Source: REIS, Real Estate Solutions by Moody’s Analytics

 

The chart above illustrates cap rate trends for the apartment sector. The 12-month rolling cap rate, which smooths out outliers, and average cap rate are both on a general decline, ending the quarter at 5 to 5.3 percent for the national multifamily market as a whole.

 

Average Price per Unit

 

National Apartment Market: Average Price per Unit, 2013 – 2019 Q4

Source: REIS, Real Estate Solutions by Moody’s Analytics

 

This chart shows price per unit trends, representing not a measure of yield like cap rates, but essentially telling the same story. The top 10 markets are leading the top 50 (as defined by transaction volume), with average price per unit in the low- to mid-two hundred thousands by late 2019.  That’s an appreciation rate of over 50 percent from the beginning of this series in 2013.

 

Sales Volume

 

National Apartment Market: Indexed Transaction Volume, 2013 – 2019 Q4

Source: REIS, Real Estate Solutions by Moody’s Analytics

 

Transaction volume has generally been on the rise as well, as presented on an indexed basis in the chart above. There is some seasonality involved given the ebb and flow of investor sentiment, but the general trend is positive


Analysis by Victor Calanog, PhD CRE®, Head of Commercial Real Estate Economics at Moody’s Analytics REIS. He and his team of economists and analysts are responsible for the firm’s market forecasting, valuation, and real estate portfolio analytics services. He holds a PhD in Applied Economics and Management Science, trained by a dissertation committee composed of faculty from the Wharton School of the University of Pennsylvania and Harvard Business School.

Copyright © 2020 Moody’s Analytics REIS

 

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