The 69 Unit Dorchester House Sold During the Pandemic for $4,250,000
These are strange days indeed! I speak to investors daily, and the main question they are asking is “What is really going on out there in the apartment market?” Here is what I am seeing during the COVID pandemic:
Deals are still closing. Our firm has closed a number of deals since the virus shut down Oregon/SW Washington, although the buyers and sellers were very concerned (and tense) throughout the transactions. Deals are still closing, although most of the deals were in the pipeline prior to the shutdown.
Serious buyers are buying, “casual” buyers have left the market. For example, pre-pandemic, on an 8 unit listing in Salem, I had multiple offers (six) on the offering, some of which were first time buyers. The deal went under contract, the virus hit, the buyer withdrew the offer, and the property went back out to market. Then, three new offers came in (different from the previous offerers) from experienced or 1031 exchange buyers. The deal closed, but the “casual” buyers went away.
Arizona is a HOT market. We have also seen a number of deals close from our Arizona office. Also, new deals are starting during the pandemic, signifying that buyers and sellers are motivated to transact, especially in the Phoenix/Tucson market.
Prices are not dramatically decreasing. Buyers are requesting price reductions due to the virus and rent concessions, and sellers have considered small price reductions, but overall, we are not seeing list prices decrease significantly (if at all). My takeaway here: do not expect prices to decrease in the short term as we are not seeing that occur at this point.
Many other “micro” trends are emerging, but they appear to be similar trends that occur during “normal” markets, i.e. cash offers are given stronger consideration, properties that are operated well sell without discounts, etc. We are keeping an eye on these trends and will update as life with the “new normal” progresses.
Stay safe out there, and let me know if you have any questions on the apartment market! Feel free to call me at 503.546.9390, or email: bgehret@josephbernard.net
