Multifamily investors - what does your market look like now

[Serge S.]

Costar sees signs of multifamily trouble: Multifamily cap rates rising

Looks like investors finally starting to demand real cap rates and multifamily will begin trading on present performance and not future rents. 

Here in PHX, I am getting calls from many brokers. Most are recommending clients postpone sales and some will not consider listings. One broker is pulling forward listings and throwing up everything they can hoping and preying that someone steps in.  They are looking for someone to backstop deals that are falling apart. The official communist party line is "don't expect distressed deals, prices are fine". But talk to these guys on a friendly man to man basis and they will tell you there is already distress. Class A already offering concessions and price cuts. Anyone underwriting a new deal must consider rent growth dead for 2020 and probably 2021. I am underwriting a 20% economic vacancy to account for an increase of bad debt to 7% and concessions to 3%. This may not be conservative enough.