While apartment transaction volume fell 32%, to $5.7 billion, in April, volume in 2016 is still outpacing that of 2015, according to a recent report from New York–based Real Capital Analytics.
So $45 billion worth of apartment assets have changed hands thus far in 2016, which is 5% ahead of 2015 through April.
Garden apartment activity was the biggest drag on transaction volume in April, with a 37% year-over-year decline. Mid- and high-rise volume fell 17%, in comparison.
“The garden pullback was driven more by the sale of individual assets,” RCA said in the report. “Deal activity here is down 48% year over year on sales of $2.3 billion. Single-asset deals for 2016 to date stand at $17.9 billion, 11% off the pace set for the same period in 2015.”
Cap rates also fell in April, 30% year over year. But RCA added that “the trend has been flat, with movement less than 10 basis points in any one month.” Mid- and high-rise cap rates fell more than 50 basis points, to hit 4.6%, in April. Garden apartment cap rates stood at 5.8%.
With the downward movement on transaction volume and cap rates, prices continued to rise. As measured by the Moody’s/RCA CPPITM, prices were up 11% year over year in the first quarter of 2016. By contrast, prices posted a 14% compound annual growth rate (CAGR) over the five years to the fourth quarter of 2015.
“Most of the downshift in pricing has been seen in the mid- and high-rise space,” RCA wrote. “The mid- and high-rise index posted a 17% CAGR over the five years to the fourth quarter of 2015 but [had] grown only 10% year over year in April.”