1970s and 80s apartment buildings in 2021 and early 2022, not ideally located, were selling at 3.5% cap rates, says Lee Everett of Waterton. He says “dark days” lie ahead in multifamily.
In Q4 of 2021, over 150B of capital transacted in apartments. In all of 2021, almost $400B sold. The next biggest record was 2019 which was about $190B.
Mr. Everett says 700,000 renter households formed in 2021 which was 2.5X the prior record. Much of these households formed from Millennials and Gen Z which didn’t live together like Millennials post GFC. So this “household fractionalization” increased demand and spiked rents. Ironically, there was even a working age population loss while this pent-up housing formation occurred. Great interview with Joe Weisenthal and Tracy Alloway from 1:15 to 11:30.