Q2 – 2023 Market Data
During the 2nd quarter of 2023, there were a total of 11 properties that traded for a total volume of $43.755M down 15.86% year over year. The median price per unit of these deals was $264K, down 19.70% year over year. The average CAP rate is up 40 basis points from Q1 – 2023 to 4.22%. The deal of the quarter was 94-289 Leonui St. a 60 unit property that traded in Waipahu for $11.5M. Download the market comps now!
On the inventory side of the coin, there are currently 40 properties (5+ units) with a total consideration of approximately $135M actively listed on the market. The average days on market is 112 days down from 116 days the month prior. The average CAP rate of deals listed on the market is 3.53%. There’s a significant gap (0.69%) between the average CAP rate of deals listed on the market (3.53%) compared to the average CAP rate of deals that are trading (4.22%). What does this gap in pricing represent? In essence, if a property has a NOI of $100K the value of the property would be $463K less if the CAP rate was 4.22% versus 3.53%. If you’re interested in receiving my Hawaii Multifamily Inventory Sheet, which tracks all the active listings, consolidated into one sheet, reply to this email to be added to the distribution.
July 2023 Fed Meeting Recap
You predicted it, during its July 2023 meeting, The Federal Reserve hiked interest rates another 0.25% to bring rates to their highest level in 22 years. The hike will bring the Fed Funds rate to the target range of 5.25 – 5.50%. Will there be more hikes to come later this year? Fed Chairman Jerome Powell mentioned that they will continue to make decisions based on market data and on a “meeting by meeting basis” for the remainder of the year.
Asset Management Tip
Many of the owners that I have met say that tenant turnover has picked up and is negatively impacting their bottom line. This summer, the tenant pool is looking to reduce their costs as inflation has impacted their overall spending. My recommendation is to have a plan or system in place to both retain tenants and replace them in a timely manner reducing the negative impact on your cashflow. If you want to implement a tenant retention program or develop a tenant turnover system or streamline your existing process, let’s sit down and discuss a few strategies that are working in today’s market.
Multifamily In the News:
Here are links to several articles and events relating to the multifamily and affordable housing sectors in Hawaii:
Hawaii Governor Takes Dramatic Action to Solve Housing Crisis. But is he Going too Far?
Emergency Proclamation Relating to Housing
State of the U.S. Multifamily Market: Mid-Year 2023
Hawaii CCIM – Bill 7 Panel Featuring Paul Lam, Steve Olson, & Derek Lock. Register Now!
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