Chewing through some multifamily sales data this morning, I compiled these simple charts to break down 2011 sales into price buckets. No real surprises here, other than to highlight that by both sale price and unit count, $1-3 million buildings dominant the apartment building space in the Bay Area. If you take out one large sale in San Jose last year, these smaller buildings actually came in at a higher total sale price than the $20M+ bucket. Of course, there are many more small buildings (under $1M), but thy came in at half the sale price as the $1-3M bucket.
This market remains extremely tight. Even remotely well-priced properties are seeing multiple offers, cap rates are compressing back to pre-bubble levels and rents are going through the roof in many Bay Area markets. It feels frothy … but the residential market also felt frothy in 2004 and 2005. It didn’t crack until 2006. To quote Keynes, “Markets can remain irrational longer than you can remain solvent.”
Here is the raw data I used, which I pulled from tax records. It took some scrubbing and a manual pivot table (if you will), but once exported it was quite simple.