Apartment sales hit $68 billion, rising 68% year-over-year in the first quarter, according to a recent report from Real Capital Analytics.

Unlike most property sectors, entity-level transactions and portfolio sales didn’t drive volume. Only 28% of last quarter's activity came from multi-asset deals.

“The sale of individual assets can be viewed as the bedrock of the market and here the apartment sector posted 54% year-over-year growth on sales of $23.8b,” RCA said in the report. 

Entity-level and portfolio volume grew 117%, but that was driven by the Gables Residential deal. Portfolio deals, alone, grew 57% to $6.2 billion. As this was occurring, apartment prices rose 10% on the year and are now 21% ahead of the peak prices seen in 2007, according to Moody’s/RCA CPPI. That has been a cause for concern in some circles.

“This far into the price expansion for the apartment sector, many analysts and investors had worried that the ongoing growth in sales volume could not continue,” RCA said in the report. “If anything the pace is now accelerating again, both for portfolio and individual asset sales, as investors hungry for yield still find the immediate returns from the apartment sector attractive.”

As prices and sales volume rose, cap rates fell, dropping 30 basis points year over year to 5.9% in the first quarter. At this point, the previous peak of 6.5% in 2008 is far in the rearview mirror.

Not surprisingly, mid- and high-rise assets were the faster fallers, down to a record-breaking 4.7% cap rate, which is 80 basis point below the previous high, according to RCA. Cap rates on garden-style properties fell 30 basis points to 6.2%.

“Cap rates for Mid/high-rise assets fell not just in the [year-over-year] context but have been trending down since 2013 while garden apartment cap rates have been somewhat flat,” RCA said in the report.

Secondary markets moved ahead of the six major markets in the quarter, with $16.2 billion in sales, according to RCA. The six major metros totaled 12.3 billion in the quarter.

“Across the five major property types we analyze, only in the apartment sector is it the case that secondary markets posted more activity than in the six major metros,” RCA said in the report.