Market View
by Jay Greenberg
Dollar volume in the five- to nine-unit sector for January 1 to May 1, 2002, compared to the same dates for 2001, show a 22% decline, but the number of transactions for this time frame are virtually the same as last year. The 10-plus-unit sector, however, shows a dramatic decline of 65% for the number of transactions and a 45% decline in dollar volume for the same time frame versus 2001.
What is happening? Typically the first quarter is the slowest time of the year for apartment sales. Most investors are dealing with taxes. Activity usually picks upaftertaxseasonisover.Also,eventhough September 11th and the dot-com bust seem to be old news, think how recent these events really are and the dramatic economic impact they have had, locally, nationwide, and worldwide. Rents have fallen to 1998 levels and vacancy rates have tripled. Many owners are trying to stabilize declining income streams.
That the first quarter of 2002 was exceptionally slow is not surprising, all things considered. As we head then into second quarter, I feel momentum building regarding inventory and sales. The best news is that values are holding steady. Well-priced and well-located properties are still selling quickly with multiple and above-list offers. Many investors have been turned off by the stock market’s performance, the Enron fiasco and generally faulty accounting practices. They are searching for safer places to invest and more control. Investing in housing in this city is a good list.
| April Sales (Partial List) | |||
| Property Address |
Sales
Price
|
Units
|
Sq.
Ft.
|
| 1201
Greenwich Street |
$14,000,000
|
20
|
34,900
|
| 38-50
Calhoun Terrace |
$2,590,000
|
10
|
6,185
|
| 429
Bush Street |
$3,250,000
|
30
|
17,815
|
| 1855
Washington Street |
$2,835,000
|
16
|
12,312
|
| 1755
Franklin Street |
$5,750,000
|
31
|
21,350
|
| 191
Frederick Street |
Non-Disclosure
|
30
|
19,925
|
| 96
Crestline Drive |
$1,850,000
|
10
|
8,631
|
| 3301
Cesar Chavez |
$1,400,000
|
12
|
12,600
|
| 1375
California Street |
$1,500,000
|
19
|
8,898
|
I believe landlords still have a rocky road ahead for the short term. Once owners face the reality of the rental market, they will stabilize their rent rolls. At the moment, we have more units coming to the market and no job growth. Eventually, jobs will return and with them high profile renters wanting to live in this dream city. The gap between owning and renting continues to widen and they are not building any more land in the city. Stay tuned.
The opinions expressed in this article are those of the author and do not necessarily reflect the viewpoint of the SFAA or the SF Apartment Magazine. Jay Greenberg is a real estate broker with Marcus & Millichap. He can be reached at 415-391-9220 ext. 300. © Copyright 2002.