Q2 – 2024 Market Data
Activity in Q2 picked up considerably with improvements to the metrics that we track: Volume, price per unit, and median cap rate. There was a total of 8 properties that traded throughout Q2-2024 for a total consideration of $18.97M an increase of 69.38% Quarter over Quarter (QoQ). The median price per unit increased 76.92% QoQ to $324K. The median Cap Rate dropped 42 basis points QoQ to 4.14%. The average days on market for the deals that closed was 139 days.
Download Sales Comp Below
Current Inventory Snapshot
A total of 41 properties (5+ units) are currently listed on the market for a total of $170M in opportunities. Of these properties the average days on market is 175 days with 4 of the deals in escrow. The median cap rate of the deals listed is 3.92% indicating a 22 basis point delta between where deals are trading and where deals are listed.
To receive our Hawaii Multifamily Inventory Sheet, which compiles all active listings as well as off-market opportunities into one convenient document, simply reply to this email requesting to be added to the distribution list.
July Fed Decision
Following its July meeting, the Federal Reserve announced that it will keep its benchmark interest rate unchanged at 5.25% - 5.50%. They did not indicate that a rate cut during their next meeting is imminent but mentioned that further progress is needed before a rate cut is warranted. Inflation is trending closer to the Fed’s 2% target. The 10-year note an indicator of the risk-free rate of return for investors hit a low for the year on August 1st at 3.796%.
 The Fed has left rates unchanged since July 26, 2023.Asset Management Tip – Cost Segregation Study
Conducting a cost segregation study and utilizing bonus depreciation is a great tax planning strategy for multifamily owners to accelerate depreciation, enhance cashflow, and improve ROI.
Strategic Tax Planning
Offset Passive Income: Depreciation deductions can be used to offset other passive income, minimizing the overall tax liability across an owner’s portfolio.
Accelerated Depreciation
Immediate Tax Deductions: Cost segregation allows owners to reclassify certain buildings components from real property (27.5 years for residential property) to personal property (5, 7, o r 15-year schedules) accelerating depreciation.
Bonus Depreciation: Under current tax law, bonus depreciation allows for 60% (2024) of qualifying assets to be written off if placed in service in 2024.
Enhanced Cash Flow
Reduced Tax Liability: By front-loading depreciation expenses, owners can reduce taxable income in the early years of ownership, leading to lower tax payments.
Increased Cash Reserves: Lower tax payments free up cash that can be reinvested into the property, used for capital improvements, or distribution to partners/investors.
Improved Return on Investment (ROI)
Boosts Overall Profitability: With increased cash flow and reduced tax burdens, the overall after-tax cash flow and investment returns are improved.
If you’re interested in discussing your investment strategy and your goals for the remainder of 2024, let’s schedule a time to meet!
Multifamily In the News
2024 Multifamily CMBS Delinquency Rates
Yardi Matrix’s Rent Growth - 2024
2024 Employment Update
8th Proclamation Relating to Affordable Housing
Networking Events
CCIM General Membership Meeting – Neighbor Island Update
CCIM Lunch & Learn – Building Your Credit Sense
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