The apartment transaction market fell 30% year over year (YOY) in July, according to a new Real Capital Analytics (RCA) report. But a 33% increase in June means sales are still up 1% YOY for the summer so far.
“The monthly declines in sales volume for the apartment sector were widespread, with all subtypes and deal structures down from a year earlier,” RCA wrote. “This said, the elevated pace of deal activity in June almost suggests acquisitions aimed at hitting midyear goals, with July as a time to pull back and regroup.”
Individual assets sales fell 29% in July on volume of $6.9 billion, after a 22% increase in June. Overall, sales fell 3% for the two months. “The sale of individual assets paints the clearest picture of investor confidence, as every deal is underwritten to the particulars of that property,” RCA wrote.
Portfolio- and entity-level deals plummeted 36% YOY, to $1.1 billion, after having risen 92% YOY in June. “That June activity represented $3.3 billion in deals spread across a number of portfolios,” RCA wrote. “There was no one large portfolio driving all of this volume.”
As transactions slumped, cap rates continued to fall, dropping 20 basis points YOY. “This cap-rate compression is not even across all types of assets,” RCA wrote. “Investors are pricing deals more aggressively for assets in locales that are walkable.”