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This Week’s Survey Results: When Will Multifamily Prices Hit Bottom? Here Are Your Answers, and Mine.
October 16, 2009 by Neil · Leave a Comment
Every week, subscribers from six continents and 41 states receive news and information about multifamily listings unavailable anywhere else. In addition, they also participate in a weekly survey.
Last week’s survey question was:
When do you think multifamily prices will hit bottom?
Here are the results:
Answer A: 2010 32%
Answer B: 2011 43%
Answer C: 2012 11%
Answer D: 2013 14%
This site strongly believes that 2011 is the year that multifamily properties hit rock bottom. The reasoning is twofold:
First, commercial real estate, specifically multifamily, lags behind residential property by about 18 months.
Residential home prices in NYC, appear to have bottomed, since prices are trending upward, according to the most recent Case-Shiller numbers. These numbers, however, are not comprehensive. They measure by pairs the amount of publicized listings whose sale prices match each other. Shadow housing inventory that has not yet hit the market will necessarily be missing from the equation. How potentially flawed? Seven million units are yet to come online nationwide.
Second, commercial mortgage defaults will probably peak in 2011 at a rate north of 5%. Once this number peaks, there will be a feeding frenzy among funds and private money to devour these notes from their lenders — if it hasn’t already occurred. At that point, all hell will break loose: trading will be as frenzied then, as it is negligible now.
