Any real estate investor worth their salt knows how important it is to keep track of statistics and trends in the real estate market. The real estate market works in various stages, and there are many numbers that fluctuate greatly depending on current conditions. Rent prices, growth/decline, market share, occupancy rate, and many more factors should be scrutinized on a regular basis to ensure that you’re getting the most out of your investments. Furthermore, they can provide valuable info on whether to sell your current properties or acquire new ones.
One of the most respected intelligence sources in the real estate market is Yardi Matrix. Yardi Matrix conducts extensive research on various real estate property types, specializing in multifamily, office, and self-storage. While Archer Investors uses a huge number of sources to keep track of the commercial property real estate market, we’ve found Yardi Matrix to be a consistently reliable source on industry trends.
Yardi Matrix recently released a 2019 report about multifamily real estate properties, and the findings are illuminating. In a nutshell, the report makes one thing very clear: despite a small slowdown, multifamily growth is going strong in 2019. Let’s take a look at some of the major takeaways from the report.
Multifamily Growth Has Slowed, But It’s Still Trending Upward
We’ll start with the most important point of the report — multifamily property is growing at a healthy, respectable rate. While there has been a relative slowdown in the last year, the growth is “very respectable compared to long-term historical trends.”
The reason why this is significant is because of the relative volatility of the real estate market at large. Many property types are in the late stage, becoming ever more difficult to rely on as dependable investments, along with an unfavorable rise in supply relative to demand. With that being said, any property that’s showing consistent growth, even on the smaller scale, is worth considering as an investment.
While rent numbers have more or less flattened in the last couple of months, they’re up 2.9% for the year as of September 2019. Furthermore, the overall multifamily rent market has increased by about 2.5% every year now for seven years running. That’s dependable growth if we’ve ever seen it. Not only that, occupancy rates are at a comfortable 95%, with trends pointing to no signs of slowdown. These factors, and many more, are major reasons why we focus on commercial properties such as multifamily buildings here at Archer Investors.
Tech Cities and the Desert Southwest Are in Full Bloom
At Archer Investors, one reason we focus so much on commercial, multifamily properties are because they are great options for a 1031 Delaware Statutory Trust Exchange (DST). By reinvesting real estate money into a DST property, you can defer on paying the capital gains taxes that usually result from a real estate sale. But there’s another major benefit of 1031 DST properties: you can earn a steady cash flow from them without all the responsibilities that usually come with managing a property.
For this reason, multifamily properties are great options for remote investors — you don’t have to be in the same state, or even the same country to enjoy the steady benefits of a 1031 DST property. As such, it pays to know which cities are booming, and the Yardi Matrix report is instructional in this regard.
In a nutshell, recent trends reveal tech cities and the desert southwest as the most viable markets for multifamily properties this year. Tech- and research-heavy cities such as Austin, Boston, and Raleigh have the demographic to sustain rent growth even against heavy amounts of new supply. Meanwhile, Las Vegas and Phoenix are also booming. It’s always good to know which cities are on the rise, and if you invest with Archer, we’ll make sure that we’re working with only the best properties.
Seasonality Has an Impact on Market Growth
One common trend in the real estate industry is for progress to slow during the tail end of the year. Predictably, this has been true this year, averaging at a 0.1% growth rate from August to September 2019. Some markets have even gone in the negative, with cities such as Tampa and Portland falling in the -0.1% range and beyond.
It is unsurprising that we’re seeing the growth stagnate a little bit during these months. October to December marks the holiday season, and this is a period where many families and individuals are spending inordinate amounts of money. Relocating during these months can be hectic and inconvenient, so it’s no surprise that things usually start to pick up again after December ends.
This is strangely comforting — as we mentioned above, current industry trends show the multifamily property market slowing down a bit, but still showing upward momentum. If a slowdown can be attributed to normal industry trends, it is a sign that everything is business as usual. When the real estate market picks up a little more after the holiday season, there is no reason to assume that multifamily commercial properties will not also show more accelerated growth.
Investing in a Multifamily Commercial Property
Overall, things are looking good for multifamily commercial property investments. While we’ve listed a lot of the main takeaway points from the Yardi Matrix report, there is much more in-depth data in the actual document if you want to look at the nitty-gritty details.
In the meantime, Archer Investors is the team to call if you’re considering a real estate investment in commercial property such as multifamily buildings. By selling one of your current properties and reinvesting the money into a 1031 DST exchange, you can waive the burden of capital gains taxes and make valuable income without the hassle of personally managing a property.
Our main emphasis at Archer is to provide investors like you with the best-of-the-best commercial properties for the purposes of a 1031 DST exchange. We only do business with the most reliable and long-standing firms offering DSTs, and we maintain an impeccable standard for the properties we choose to endorse. Many DST sponsoring firms don’t end up meeting our requirements because of our commitment to quality, so if you work with us, you can rest assured knowing that your investment is in the right hands. Ready to get started? Contact us today.