Apartment Market, Q1 2018

Apartment Market: Prices per Unit by Region

The average sales price per square unit for the top 50 U.S. metros has stayed remarkably stable and was almost flat in the first quarter of 2018. While average sales prices have declined by 2% from the fourth quarter of 2017, they increased 10% year-over-year. Since 2013, the average sales price per square unit has climbed 23% from $143,000 to $176,000 per unit.
The chart below shows the average sales price per unit for apartment sales in the top 50 metros by region. Included are all sales transactions of $10 million and above. This metric can vary widely from quarter to quarter, particularly in the Northeast.


No other region sees quite the volatility that the Northeast does since this region is heavily weighted by New York City trades. Due to this, New York has been filtered out, as represented by the dotted purple line, showing slightly lower sales prices per square foot and nearly the same volatility. New York City saw two transactions above $250 million in the first quarter – The Hamilton on the Upper West Side and The Vogue in Midtown. Both traded for north of $600,000 per unit. In the fourth quarter of 2017, only one property traded above $250 million. As a result, the average sales price increased and the average cap rate declined in the quarter.
Looking closely at the other regions, although the average sales price fell in most, the trend lines are still sloping upwards. In the West, which is represented by the red line, the average sales price has climbed 37% since 2013 – the highest growth rate of any region. The South Atlantic’s average price, shown by the blue line, increased in the first quarter of 2018 after declining a bit in the fourth quarter of 2017. The average South Atlantic sales price has increased 27% over the last five years.
The average sales price in the Midwest, shown by the yellow line, has declined for two straight quarters but it remains above the low in 2013 when it fell below $100,000 per unit. Likewise, the Southwest’s average sales price fell a bit in the quarter, shown by the green line, but it has stayed remarkably steady in a $75,000-to-$125,000 range for five years.

Apartment Market: Sales Volume by Region

To provide a better perspective on how each of the regions weigh on the metro average, the below graph shows apartment sales volume by region. Note how trades in the West and the South Atlantic region – the red and blue lines – have increased over time. The Northeast volume has fallen since late 2015 when Stuyvesant Town and Peter Cooper Village traded, as shown by the downward slope of the purple line. The chart demonstrates how the West and South Atlantic markets have weighed on the national average statistics to a greater extent over the last five to eight quarters, while the Northeast has weighed less over this same period. As is common with the seasonality of sales trends, the overall sales volume fell in the first quarter, but it was 14% higher than in the first quarter of 2017.