MSCI: Apartment sales volume increases for second consecutive quarter

Dive Brief:

Apartment sales posted year-over-year increases for the second straight quarter in Q3 as they rose 9% to hit $35.8 billion, according to a report that data firm MSCI Real Assets shared with Multifamily Dive.
Prices, however, fell 6.3% YOY in Q3, but the pace of decline is moderating, according to MSCI. Values only fell 3.9% from Q2 2024.
Mortgage rates for apartment properties fell 50 basis points to 5.7% in Q3. Although this decline will not give investors a boost in leverage, it could change motivations to buy, according to MSCI. In the five years before the pandemic, borrowing costs averaged 4.3%.

Dive Insight:

Sales volume increased for both portfolios and single assets in Q3.

Transactions for individual properties rose in the quarter after posting a double-digit decline in the same quarter last year and rising 2% in Q2. Portfolio deals increased 33% to $6.6 billion in Q3.

Mid- and high-rise apartment transactions increased 26% YOY to $15.9 billion in Q3. In all, more than 70% of the volume during the month was mid- and high-rise properties. Sales of garden properties decreased 1% YOY to $19.9 billion.

The theme of an improving market was also apparent in the National Multifamily Housing Council’s October 2024 Quarterly Survey of Apartment Market Conditions. Respondents indicated that sales volume, equity financing and debt financing came in above the breakeven point in Q3.

“The 10-Year Treasury yield fell 28 basis points over the past three months as the Federal Reserve enacted its first, 50 bps cut to short-term rates,” noted NMHC’s Economist and Senior Director of Research Chris Bruen in the report about the survey. “Survey respondents, in turn, reported more favorable conditions for debt financing for the third straight quarter and more available equity financing for the first time in two and a half years.”

Feelings about which markets benefitted most from the rebound in transactions varied. Thirty-eight percent of respondents thought primary metros, like New York City and Miami, were receiving an increasing share of sales volume relative to secondary and tertiary markets, like Nashville, Tennessee and Austin, Texas. However, 10% of respondents said smaller locales were seeing more investor demand.

Click here to sign up to receive multifamily and apartment news like this article in your inbox every weekday.