The Astoria multi-family marketplace is exploding. Just this week, I sent out a contract for an eight-unit building for almost 15x rent roll. A NEW RECORD!
This is completely understandable when you review the trends that are developing:
• A comparison of multi-unit walkups in Astoria shows nine were sold from 6/1/13 to 12/13/13 vs. three for the same time frame last year. Triple the amount of transactions.
• Within time frame of 6/1/13 to 12/13/13, six of the nine properties were sold from 9/1 to 12/13.
• In 2012 (9/1 to 12/13), no properties traded.
• The average sales price in 2013 is $2,375,000 vs. $1,990,000. An increase of +19%.
• The median price per square foot increased +14% at $223 vs. $196.
As the data demonstrates, more and more owners are selling. Many believe that we are now at the top of the market with a bursting bubble soon to follow. Why? Simply put, interest rates. Since May 2013, rates have risen over 1 point. This has not impacted the market yet, but further rate increases are sure to follow. Recently, the federal government has stated its movement towards a pullback in its bond buying program. This will surely move interest rates substantially higher.
As rates climb, profitability falls, and in turn, prices start to come down. Logically, there’s more downside risk in prices falling than there is in pricing climbing. Nobody can accurately time the market, so doesn’t it make sense to consider selling now?