Dive Brief:

• Apartment sales continued their descent in the second quarter of 2023, falling 72% year over year to $28.2 billion, according to a report that data firm MSCI Real Assets shared with Multifamily Dive. Prices fell 11.7%, which was the biggest decline among all major commercial property sectors.
• In its report, MSCI noted that sales hit all-time highs in Q2 2022 as cheap debt and thirst for yield pushed investors to new limits. Compared with that environment, steep volume declines were all but inevitable in 2023. Still, sales volume was 26% lower than the average second quarter in the five years before 2020.
• The sales of individual assets were down 68% YOY to $22.3 billion, while entity and portfolio sales dropped by 80% with $6 billion changing hands. Garden apartment transactions fell 75% to $16.7 billion and mid- and high-rise deals dropped 65% to $11.5 billion.

Dive Brief:

In the first quarter of this year, apartment sales fell 64% to $25.4 billion, according to MSCI. But the declines accelerated in April and May. Apartment sales fell 74% YOY in April to $7.1 billion as prices dropped 12.1%. In May, multifamily transactions fell 79% YOY to $7.7 billion, while prices slid 12.5%.

In many of the sales that are occurring, buyers are assuming existing debt. That happened when Newton, Massachusetts-based apartment owner Northland was able to assume the existing financing on Glenwood at Grant Park in Atlanta in July.

Earlier this year, Bethesda, Maryland–based apartment owner RailField Partners closed on the purchase of the Pinewood Station Apartments in Hillsborough, North Carolina, by taking on the loan.

“We were able to assume the loan and take away all of the interest rate risk,” Jon Siegel, co-founder and chief investment officer at RailField, told Multifamily Dive at the time.

But the door could soon be opening to other transactions. Market observers, like Los Angeles-based apartment owner BH Properties’ Managing Director Bill Stoll, expect to see more forced sales in the coming months. He thinks owners who took on short-term loans from debt funds may be forced to make difficult decisions.

“They’re going to have to put equity into these deals that they don’t have,” Stoll told Multifamily Dive. “They're either going to have to sell or do capital calls with their investors.”

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