| |
 |
The year’s not over, but it’s safe to say 2009 goes down in the record books. And we’re looking at some new records being set in 2010 and 2011 as well. We’ll talk about two of them, and what they mean for apartment investors sitting on the sidelines right now.
Apartment investors in King, Pierce, and Snohomish counties closed on only 2,500 units in 20-unit and larger properties this year, through late November. That totals just $250 million in sales volume.
To put that in perspective, buyers in 2005 scooped up almost 26,000 units for $2.6 billion. There will be more sales closed before the end of the year, but we bet fewer apartment units will sell this year than in any year since 1976. That’s more than 30 years.
We didn’t look at the long term trend in dollar volume because the impact of inflation would make those numbers meaningless. But even a comparison of units sold understates how dramatic this year’s drop in sales activity is. There are more than twice as many apartment units in the market today compared to 1976. Our population has increased 80%. So even though this year’s sales activity is almost the same as it was in 1976, it should have been double to just keep up with growth since then.
There are a lot of reasons investors give for this year’s drop in sales activity. Some say there’s no financing. We’ve heard that before, so we’ve learned it doesn’t really mean there’s no financing. It just means investors don’t like the terms. We surveyed lenders this fall and found more than 20 companies with significant capital ready to lend on apartments and published the results in our Apartment Lender Directory.
It’s hard to say exactly how much money is available for our market. But a number of the lenders surveyed said they have goals to place anywhere from $40 million to $140 million or more in the local apartment market over the next twelve months. Granted, the terms on new loans aren't as sweet as they once were. And the underwriting is brutal. But there is money and we talk to investors regularly who are taking down new loans.
Another reason given for the dismal sales volume this year is owners are just not putting properties on the market because they don’t like the fact that prices have fallen. It’s true that...
