The big stats chart is getting a bit unruly as it grows, so I thought I'd throw up some charts and a few thoughts here and if you're interested in seeing the full data set every week just shoot me an email and I can send it out as a .pdf document.
The charts below illustrate two points that I knew were true in today's market, but by keeping these statistics I see that these points are even more salient that I thought:
1. The lower end of the market is far-and-away healthier than the higher end. Shell properties which have an average sale price around $40,000 are selling much more readily and maintaining a much healthier inventory level than larger multifamily properties. And even among multifamily properties, the smaller the better in terms of a return to market normalcy - 2-4 unit properties are starting to get close to a one-year inventory level - still a buyers' market, but no where near as out-of-whack as larger multifamily properties.
2. Financing is super important for the health of the investment real estate market. This is obvious and everyone knows it instinctively, but these numbers bear it out. The main reason cheap, single-family shell properties are trading while larger multi-unit buildings sit on the market is that there are more local investors who can pay cash at the $40,000 level than at the $430,000 average list-price level of multi-unit properties in Philly. The trickle of 5+ unit sales is in step with the trickle of bank-financing available for these properties. 2-4 unit properties perform better because they are eligible for FHA financing when one unit is owner occupied. Where financing is available is where you'll see properties trading - a good rule of thumb for trying to get in and out of product types if you have a good feel for the capital markets.
Questions and Comments Welcome as Always.
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