Market Cycle | Ashworth Partners

UPDATED: The Apartment Market Cycle Peak Is Here, It’s Just Not Evenly Distributed Yet

Apartment Building Investment Cycle with Expanded Peak — How I Learned to Stop Worrying and Love The… Low Cap Rates. Click on image for full size.

Was quoted in a Multifamily Executive piece this week by Joe Bousquin Cap Rate Limbo: How Low Can They Go? discussing where we are in the apartment building investment cycle, whether multifamily cap rates could go any lower and how do you make a deal pencil in this environment. It’s a good quick read with apartment pros from around the country sharing their thoughts on how things stand. I really got a kick out of the Barbara Gaffen’s story about a Chicago property trading for $651,000 a unit.

Here are the rest of my comments:

The market cycle peak is here, it’s just not evenly distributed. Cycle tops (in the absence of a financial meltdown) tend to be rounded and therefore very hard to call. We’re focused Continue reading UPDATED: The Apartment Market Cycle Peak Is Here, It’s Just Not Evenly Distributed Yet

3 Things I Learned Charting Apartment Building & Commercial Real Estate Market Cycles

Seattle’s Strange Trip Through the Apartment Building Investment Cycle Part II

In part I we saw that some of the most widely followed market cycle research can’t be relied on without question. If knowing where we are in the market cycle is the most important thing (and not everyone agrees, see the comments from one of my private equity guys about that under part I here) then the best solution is probably to chart the cycles for the markets we’re investing in ourselves. If you’re in multiple CRE sectors in a lot of markets hopefully you have someone on your team or can hire a consultant (like Ashworth) to chart those cycles.

SEA occupancy v cycle position WTH — Click on images for full size.

Building our own CRE market cycle chart

To track a cycle for one market and sector we only need to answer five questions according to Professor Mueller’s methodology: Market occupancy, the 30 year Long Term Average (LTA) occupancy, rent growth, inflation and new unit construction. Later we’ll look at whether we can Continue reading 3 Things I Learned Charting Apartment Building & Commercial Real Estate Market Cycles

Apartment Market Tightness, Equtiy Financing Slide Backwards in Latest NMHC Survey

The National Multihousing Council’s (NMHC) latest apartment investment survey out today has market tightness falling to 52 from 68 last quarter. With 50 representing the better vs. worse divide, results show respondents are feeling the bite of new supply plus a bit of seasonal slowdown as well I sense:

NMHC Apartment Investment Survey October 2014 — Source: NMHC

While the Sales Volume and Debt Financing measures both improved, Equity Financing also slipped. As you can see from the charts above the results tend to be noisy and I suspect that with the survey format it carries a few behavioral biases as well. You can see that the world was ending according to Continue reading Apartment Market Tightness, Equtiy Financing Slide Backwards in Latest NMHC Survey

What do I do with my retirement money, one investor’s answer (with charts). Think apartment building investment-

Good charts on long term returns in this piece from Glenn R Mueller, PhD.:

I recently met with my financial advisor to “rebalance” my … retirement portfolio. Based on my “age and stage of life” his allocation model showed a 50% bond allocation. I laughed and asked him if the company allocation model assumed interest rates would rise over the next 10 years? His answer was “yes- of course.” I showed him the graph below which shows lower than average TOTAL returns in a rising interest rate environment and he checked his long-term data and found that bond holders between 1953 and 1980 had actually lost money. We all know that as interest rates rise, bond values decline and thus the total return can be small or negative. Not to mention that a 10-year treasury at 1.5% is below expected inflation and thus a NEGATIVE REAL RETURN. He agreed that a bond allocation did not make much sense, but since my investor profile was conservative what was the alternative?

Dr. Mueller is Continue reading What do I do with my retirement money, one investor’s answer (with charts). Think apartment building investment-

Apartment Building Investment In Seattle, here’s the good news- video

Seattle Apartment Building Investment update video Translation: We would never overbuild or get started too late in the apartment building investment cycle 😉

Seattle Apartment Building Investment Cycle peaking or just taking a breather?

In his Q4 report on the Seattle multifamily market ARA’s Jim Claeys says:

Vacancies and Concessions UP

Absorption and Rents DOWN

New Construction Pipeline UP 140% from year ago

Also Home and Condo Sales UP 41, 70% respectively

Sounds kind of like the cycle is moving to the next phase doesn’t it? See the whole article here: This may be a good time for developers to reassess their projections