MIAMI, FL - Don't be surprised if buyers and sellers in the multifamily housing market look like they're playing Marco Polo. Currently, both are treading water with their eyes closed, their hands out and nobody can find the market, according to CB Richard Ellis Multifamily Group.
"Both buyers and sellers face uncertainties in determining the appropriate market price for a multifamily asset," CBRE associate Calum Weaver wrote in a recent forecast report for 2008. "The biggest issue on both sides, seller and buyer, is that no one wants to pay or sell at a bad price. They are searching for 'the market.'"
The problem, CBRE VP Charles Crapse said, is that conversions and the flood of new product could turn the rental market upside down this year. Competition from unsold and vacant condominiums and single-family homes has the potential to perpetuate a "shadow market" of inventory that could increase vacancy rates in the short term and flatten lease rates. The flat line is making it harder to justify the high prices the boom generated for apartment buildings through the beginning of 2007.
Crapse is quick to point out, however, that several variables potentially offset some of the negative impact of the shadow market.
Source: South Florida Business Journal