Night and Day
By David Larson

  Rising interest rates, the uncertainty of the war in Ukraine, high inflation, and a number of other outside factors that we have little or no control over has turned to multifamily sales market upside down.  From Q-1 to today, to say we have had a shift in the multifamily market as far as sales of properties is concerned would be quite an understatement. In the crash of 2008 sales of commercial properties, including multi-family, did well after the downturn was felt in the single family market. If we look in the graph below at what is happening today with the sales of multifamily properties, we do not need to go far to see they have fallen off recently and maybe leading single-family properties. 

   Sales have fallen a fair amount, but vacancy rates as well and lease rates are both very strong.  Johnson Perkins Griffin Appraisers see a vacancy rate in Q-2 of 2.66%, the same as Q-1. I suspect the actual vacancy rate is higher as they run their survey after projects are   stabilized to 90% and some of the new projects may move the vacancy rate a little higher. A driver in the vacancy rate and rent decrease in 2008 was the job market collapse and a population exodus from northern Nevada.  Today, we are seeing the reverse of 2008 with a strong job market with employers challenged to get enough workers, and refugees from California adding to a population that need somewhere to live.
Rents increased at 2.8% quarter to quarter which if you annualize is a large increase in rents.
   Our market looks strong. However, if we look at the factors now affecting the market they have been generated outside of our market and control.   Unfortunately, world and national affairs have affected us in a negative way. If I dust off my crystal ball and looking into next year, I see vacancy rates increasing, but not by a large amount, and rents stabilizing. Any prediction as the one above shows a little arrogance and ignorance because we really do not know what the world has in store for us.