Categorized | Commercial

U.S. Apartments Key to Commercial Property Recovery

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The apartment sector has proven to be the key to overall recovery in the commercial real estate market of the United States. With home ownership at the lowest levels in almost fifteen years, the apartment market is surging. Investors are looking to buy apartment buildings to take advantage of the market potential, thus helping the multifamily housing sector recover the value of defaulted mortgages at a stronger rate than any other sector.

 

Apartment building sales in the United States were up more than fifty percent from one year ago in January, and that number looks to grow even stronger in the coming months. Total sales in the month of January nearly topped four billion dollars.

 

With record low interest rates, and fairly strong capitalization rates, the apartment market represents a very safe investment for investors. As such, it should come as no surprise that the total dollar value of originations of multifamily loans hit its highest point ever during the fourth quarter. Buyers are showing that they are willing to pay more for each property due to the cheap financing available, and the near guarantee that ownership of such a building will provide a guaranteed return.

 

One reason why apartment buildings in the United States continue to sell for increased amounts is due to limited supply. In 2011, despite the overall demand, less than thirty-eight thousand apartments were completed. That number marks the absolute lowest yearly total of new apartment construction in more than three decades.

 

With limited supply, strong capitalization rates, and rock-bottom interest rates, it should come as no surprise that the apartment real estate market

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About Drew Wilson

Drew focuses on the Commercial and Mortgage/Finance categories.

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