TOP TREND #4: Migration Patterns Away From Urban Core
I am seeing 3 major migration patterns due to COVID:
#1: Covid tended to get people to move from urban to more rural
- Get more space, less density, yard for the kids
- Working from home
- Uptiered their living arrangements
#2: Moved from downtown core to alternative locations
- Suburbs or maybe even rural environments
- Not commuting, more time at home
- This is the moving out of small NYC apartment to a 2000 SF home in New Jersey
- Home builders are seeing a record rise in building
#3: People may move their investment decisions to a secondary or tertiary market
Examples are out of CA to AZ, or even out of Oregon to AZ, we are seeing a lot of instances
Same trends, these three are all connected
I call it the “COVID MOVE”, where the word ‘move’ has both connotations: moving living space and moving investment locations
TOP TREND #5: Salem Transaction Values Increasing
Quick stats on last 12 months transactions
- 5.9% cap rate
- $144/square foot
This is consistent with how markets performed, Salem always trailed Portland, and Portland always trailed the other west coast cities. There was no real reason for the descrepancy for the past twenty years, and now Salem is catching up and starting to normalize. It is almost as if Salem is the new “South Portland”.
TOP TREND #6: Low Multi-family For Sale Inventory
This is similar to recent history, at least the past ten years (even more noticeable the past three years), where there is very little available for sale compared to prior years. This means we are still in a strong sellers market.
What does this mean?
- If you are a buyer with low inventory, you are going to need help finding a deal, because there are more buyers than properties
- If you are a seller with low inventory, you should have someone help you maximize both ends (maximizing your sales price and finding your 1031 exchange upleg)
Should you do it yourself in this market? Absolutely not, as there is a huge upside in maximizing your value in this market by getting help and also finding the 1031 deal.
NEXT POST: I will update on the latest proposed legislation in Salem, which allegedly includes a relief for tenants, and allegedly for landlords…