Market Trends

Investors keep looking for apartment buildings to buy at good prices. The search is leading them to smaller properties in smaller markets.

Despite tight inventory levels, overall home prices are accelerating at a subdued pace as buyers remain on the sidelines by not providing offers on marketed homes. Housing needs are then directed to apartments. Last year, more than 340,000 units were absorbed, the highest level since 2000.

Sizing up a potential real estate investment is no easy task and there are a number of things investors must consider before closing a deal. Two of the most critical factors are the cap rate and the IRR or internal rate of return. There are some similarities between the two but it’s important to understand exactly what they measure and why they’re important.

Investor confidence in the stability of the multifamily sector this year remains strong, despite robust new supply levels and concerns regarding rising inflation and aggressive interest rate hikes.

                   Research Brief August 2017 HOUSING       Developing Trends   ■ Apartment construction appears likely to peak this year as more than 370,000 units are slated for delivery, up from 290,000 apartments in 2016....

A combination of job growth, healthy demographics and accelerated household formation creates a rosy outlook for apartment investments in the coming year. For Chicago, location and property type should be taken into consideration. This is according to Marcus & Millichap's 2018 Multifamily North American Investment Forecast.