Multifamily Still Strong

Despite talk in the NY area that prices for residential property are overheated, and although Connecticut is considered to be one of the places where buying makes more sense than renting, both have more multifamily properties in the LoopNet weekly report of the most viewed properties.  In the NYC region, 7 out of 10 of the listings mentioned were multifamily, and 8 of the 10 in CT were in the same category.

What this suggests is that it may be less about demand for the end product, and more about demand for investment properties for mostly smaller investors, at least in Connecticut.  By that, I mean that REITs may be looking at other things, but that much of what would be considered "affordable" purchases for individuals are now falling into the multifamily basket.  It could also mean that sellers are beginning to put those investments up for sale, either to reap the profits to reinvest, or to lock in gains before there is an oversupply.  Or that the stock market is getting the proceeds from any sales.

Under any scenario, it's clear that the action lately is strongest in the investment realm.  Since LoopNet is telling us that buyers are looking largely at those types of listings, it makes it a good time to list. 

The Multifamily Category is Still Hot

When I look at the LoopNet list of the most-often viewed properties in Connecticut each week, I am struck by how many are multifamily properties  (and also about how few are ever industrial, where there is a big supply).  Week after week, thousands of people view residential investment rental properties.  Why the appeal, and why is it not waning?

I think that the appeal is like all of real estate--a tangible investment in a time of uncertain returns in many investment categories.  It also is the type of investment where those who are handy, or have some free time, can improve properties or cut expenses, and raise returns, something that cannot be done with stocks and bonds.

But won't the supply exceed the demand?  People don't think so, and that's coming from two ends of the age spectrum--millennials and seniors.  Millennials, with little desire for home chores or fixed commitments, and with a lot of educational debt, are renting in bigger numbers and for longer.  And downsizing older adults are no longer finding a stigma in rentals, so they are often selling big homes and renting in urban areas especially.  Since Connecticut has a very high average age, we have a lot of those people.  Also, professionals who move here to take jobs are renting much more often.  They are renting more everywhere, for the reasons above, but our state has a very high percentage of people who want to avoid what they see as an illiquid investment--an owned house--and high estate taxes, so they consider buying somewhere else, or keeping the house they had elsewhere, and renting here.

Will this continue?  It seems to be holding up for the present, even in New Haven, which has loads of new product coming on line.  It may well be that, at some point, those who are slumlords, or who have not reinvested in their properties, will be forced to lower rents or make improvements, in order to compete with the newer buildings, but even that hasn't quite happened yet.  So the interest in the segment continues. 

Lots of Hits

For all that Connecticut is being labeled as the place to leave for doing business, we are getting lots of inquiries about our listings.  In fact, "commercial real estate" is the number one thing that people Googling Pearce type into their search line.  We also get as many Ready Chat leads (those who talk to the little person who appears on the screen when you get to our site) for commercial real estate as we do for residential.  Since that doesn't correspond to what the general impression of the state of the commercial market is, I thought it was worth passing along.

People looking at properties on LoopNet are also a big source of leads for our commercial agents.  Those who search through LoopNet can be either local or not.  While calling or emailing about a property is obviously not the same as buying it or leasing it, and not all leads result in sales or leases, it's a promising start.

So feel free to join the crowd, and look for us at www.hpearcecommercial.com.