We are at the top of the market. If you are considering selling, now is the time!
November 2, 2018
As a commercial broker I talk to a lot of people. Interestingly enough, the conversation always turns to the same topic during nearly every conversation: What’s going on in the market? Everyone, it seems, either wants to know or has a theory, and the more astute investors have incorporated their prediction into a strategy. So while I am not pretending to be an economist, allow me to lay out what prominent economists and financial publications are currently stating.
“The End is Near For The Economic Boom”
This is the headline for a recent story in Fortune Magazine. In it, Geoff Colvin states: “The current economic expansion is much nearer its end than its beginning, as accumulating hints suggest—including the stagnating stock market…Already the concerns are pushing up long-term interest rates, which is bad for asset values. Uncertainty about the effects of a trade war is causing many companies to postpone action, dampening potential investment. Indeed, look past those disco balls and you’ll see economic warning signs everywhere. A significant slowdown or even recession is coming sooner or later, and it’s probably coming sooner than you think. It always does.”
“The U.S. Housing Market Looks Headed for Its Worst Slowdown in Years”
In this recently published article on business newsite Bloomberg.com, authors Gopal and Chandra write: “The U.S. housing market — particularly in cutthroat areas like Seattle, Silicon Valley and Austin, Texas — appears to be headed for the broadest slowdown in years. Buyers are getting squeezed by rising mortgage rates and by prices climbing about twice as fast as incomes…”This could be the very beginning of a turning point,” said Robert Shiller, a Nobel Prize-winning economist who is famed for warning of the dot-com and housing bubbles, in an interview.
Economic stimulus “is going to hit the economy in a big way this year and next year, and then, in 2020. Wile E. Coyote is going to go off the cliff.”
So says Ben Bernanke, the Former Federal Reserve chairman. Since he was at the helm of the Federal Reserve Bank during the last big downturn, his words carry an enormous amount of weight. Smart investors pay particular attention to his predictions.
Multifamily Property Values are at an All-Time High
If you pay any attention to the multitude of postcards flooding your mailbox or the numerous articles in the news you can’t help but to notice that property values have never been this high. Properties are selling with multiple offers, at ridiculously low cap rates and unheard of prices per unit. Whether a building is a contractor’s dream or a trophy property, buyers are snapping up multifamily properties before they even come to market.
It is an Ideal Seller’s Market
Rarely do we see such a strong sellers’ market. Many of the conditions exist today to capture your property’s increased value.
• Demand from local, national and international investors is very high
• Rental rates are high, boosting income and hence, property values
• Interest rates are low
• Institutional and private money loans for all investors are widely available
If you’ve considered any of the following:
• Selling or “cashing-out” of your current property,
• Performing an IRS §1031 Tax-Deferred Exchange,
• Exchanging out of an apartment property and into a less management intensive, property type such as a Triple Net Lease,
• Splitting up an ownership partnership, or
• Distributing the earned equity to your heirs prior to your passing,
…now is the time. Demand is high, interest rates are low, and the short-term economic outlook is very robust. I can provide you with a valuation of your property based not only on recently sold comparable properties, but on the market outlook as well.
If you are interested in knowing the value of your property, contact me today. I can also provide you with area rents, an overview of local conditions and other market information. I publish this information in monthly email newsletters and thrice yearly printed newsletters at no charge to multifamily building owners. To receive a copy simply call me at 408-356-1900.