U.S. Apartment Transactions Slump to Lowest Level Since Pandemic

Investments in U.S. apartments continued to decline in 2024’s 1st quarter amid the high cost of borrowing and economic uncertainty. Though the asset class remains an attractive commercial real estate investment, sales have fallen well below pre-pandemic levels. Nearly 1,040 apartment properties changed hands at a value of $20.6 billion during 1st quarter 2024, according to MSCI Real Capital Analytics. The overall sales volume during the quarter was down 25% from 1st quarter 2023, while the number of properties trading hands was down 26% during the same period. This was well below the 4th quarter 2021 peak, when around 5,400 properties changed hands for more than $166 billion as the result of pent-up demand following the onset of the pandemic. Recent activity was also well below the $42.2 billion quarterly average during the five years leading up to the pandemic (2015-2019). Prior to the pandemic, the value of quarterly apartment transactions hadn’t fallen below $21 billion since 1st quarter 2014. The average price per unit, while above pre-pandemic levels, has also continued to fall, registering at $190,184 in 1st quarter, down 6.5% year-over-year and the lowest level in three years. By comparison, per unit pricing from 2015 to 2019 averaged roughly $151,000. Meanwhile, cap rates for apartment transactions in 2024’s 1st quarter were up 50 basis points (bps) year-over-year, averaging 5.7%. That was the highest cap rate in nearly eight years. Still, multifamily cap rates during 1st quarter remained the lowest among major property types.