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New feature added June 27, 2007: We have discussed the impact on apartment prices caused by purchases of properties for condominium conversion in past issues of The Apartment Advisor. The most recent discussion appeared in the April 2007 issue on page 6.
Generally, apartment sale trends are inflated by properties purchased for condominium conversion. Although not always the case, properties bought for conversion typically cost more per unit or per square foot and the capitalization rates are usually lower. As a result, looking at price trends for all sales tends to overstate prices of properties bought as apartment investments and understate prices of properties bought for condominium conversion.
Subscribers to The Apartment Investment Report have been able to create their own custom reports to analyze price trends. But these reports always included properties bought for longer-term investment as well as properties bought for condominium conversion.
Now Investment Report subscribers can also generate custom reports of sales activity that analyze price trends for only properties bought as apartment investments. This option excludes properties that sold and converted to condominiums. This feature gives you a better picture of pricing for properties buyers planned to hold as longer-term apartment investments.
You can select any of the following "investment goals:"
Subscribers to the Condominium Conversion List who also subscribe to The Apartment Investment Report get the new feature above. Plus, they also have the ability to create custom reports that show price trends for just the sales that converted to condominiums. This lets users compare price trends for investment sales compared to conversion sales. (Note: You need to currently subscribe to both reports because this feature contains elements from both reports.)
You can select any of the following "investment goals:"
In addition to apartment sale trends since the beginning of 2000 for 5-unit and larger properties in King, Pierce, and Snohomish counties, the custom report also lists the ten most recent transactions for the market area and other criteria you select, such as property age range and size range. The list includes summary financial information for each sale.
If you subscribe to both reports, you can look at sales of properties purchased for conversion, or sales purchased for longer-term investment, or both.
We update the online database for these custom reports almost every Friday morning. As a result, the custom reports usually include sales activity as recent as a a week ago.
Log in by clicking on the "my account" tab or the "Log in" tab on the navigation bar above. Then scroll down your "My account" page to the "Subscriber resources" section. Under the subheading for The Apartment Investment Report, click on the link, "Create a custom online investment report." That will take you to a form where you can create your own custom criteria.
You can create customized investment reports based on your own criteria for market areas or neighborhoods (you can even define your own neighborhood boundaries), property size range, and property age range.
Now, with this new feature, you can also look at trends based on two investment goals: buying for condominium conversion or buying for longer-term apartment investment. [About the customized reports.]
When you create a custom online investment report, you can now look at sales trends three ways:
The new "Step 5: Select an investment goal," lets you either include or exclude purchases made for condominium conversion. It also lets you combine both groups to look at overall sales trends (this used to be the only option).
The final report shows investment trends by year from 2000 for sales volume, prices (per unit and per net rentable square foot), gross multipliers, capitalization rates, and more.
There are two ways to look at the timing of conversions:
We have set up the custom form so you can analyze trends both ways.
You can select the option, "Conversion only (includes sales that converted within 12 months)." The buyers of these apartments converted them to condominiums within a year of buying the properties. Clearly conversion was their primary goal. As a result, it makes sense to look at apartment investment trends excluding these transactions. And it makes sense to look at purchases for conversion including these transactions.
There is another way to look at price trends. What if a property sold in 2000 but did not convert to condominiums until 2007? In this case it is almost certain that the original purchase in 2000 was analyzed as a longer-term apartment investment, not as a conversion.
But since it did ultimately convert, clearly the property had the location, design, amenities, or other features that made it a good conversion candidate. So the sale price in 2000, although a true apartment investment sale, was probably influenced by some or all of the features that made it an ultimate conversion property.
So we set up the custom form so you can include all properties that sold since the beginning of 2000 and ultimately converted, even if the conversion took place after a number of years, and even if the property sold again before converting. To analyze sales activity this way, select the option, "Conversion only (includes sales that converted regardless of timeframe)."
The new "investment goal" option also lets you analyze trends for properties purchased as longer term apartment investments. You have two options, just like the conversion sales options:
Your custom report includes a list of the ten most recent sales for the market area, property size range, and property age range you define. If you set up your report to analyze either of the two "Conversions only" options, the resulting report and list of sales is for sales of properties that converted to condominiums, or will convert soon.
The list shows the ten most recent sales. It does not show the ten most recent conversions. If you want to determine the number of properties or units that converted in any time period in any market area, use the Condominium Conversion List instead.
Once you create a custom report you can print it like any other web page. However, you can also print out a more "user-friendly" version of the report as a PDF.
Plus, you can download your custom report's data in an Excel workbook so you can incorporate the results into a report or combine with other data you want to analyze.
When you go to open or download an Excel file you may get a warning message on your browser, saying something like: "The file you are trying to open is in a different format than specified by the file extension. Verify that the file is not corrupted..."
The file is fine and you can open it. This message is caused because our website uses an XLS extension on the generated spreadsheets so you can download them and use them in Excel, but the actual file our website is creating for you is not using Excel code, it is using XML/HTML. It has no impact on your ability to use the file.
You have a lot of flexibility in defining a variety of custom settings for your reports. If you want to run the same custom settings periodically (to monitor market changes as an example), you can easily save those settings once you generate your report. [More about saving your custom settings.]
