Tuesday, March 24, 2009

Top Apartment Market by Marcus & Millichap

Marcus & Millichap released the 2009 National Apartment Index. The index tracks different markets based on various criteria, such as effective rent growth, vacancy, employment, construction and affordability. Here are the top 20 markets for 2008 and 2009.

Rank20082009Cap Rate Range
1San FranciscoSan Franciscomid- to high-4 %
2SeattleSan Diegolow-6 %
3New York CityWashington, D.C.5.5 % to 7.0 %
4San JoseLos Angelesmid- to high-5 %
5OaklandSeattlemid- to high-5 %
6Los AngelesOaklandlow-6 %
7Orange CountySan Josehigh-4 %
8San DiegoOrange Countymid-3 % to low-4 %
9Washington, D.C.New York Citynot stated
10PortlandPortlandnot stated
11ChicagoDenverhigh-6 % to low-7 %
12BostonPhiladelphialow- to mid-7 %
13DenverChicagohigh-6 % to low-7 %
14Las VegasNew Jerseynot stated
15Fort LauderdaleMinneapolis-St. Paullow- to mid-7 %
16Riverside-San BernardinoLas Vegasmid- to high-6 %
17Salt Lake CityRiverside-San Bernardinomid- to high-6 %
18MiamiSalt Lake Citymid- to high-6 %
19PhoenixMiami7 % to 8 %
20TucsonMilwaukeelow- to mid-8 %
Source: Marcus & Millichap

San Francisco ranks the first position both in 2008 and 2009 because of its strong effective rent growth. It is very interesting fact that despite of the high foreclosure and unemployment rate in California, six metropolitan areas in California occupy the top 8 markets during 2008 and 2009.

Another observation worth to mention, the higher the rank of the market, the cap rate tends to be lower.

So should you invest in California, or should you invest out of the state of California? There is no general answer to this question. It is very specific to your circumstances and objectives. I will write the advantages and disadvantages of investing in California versus investing out of California to help you in your investment decision. Come back and feel free to post a comment or feedback!

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1 comment:

  1. As you have mentioned...investors look for cash flow, speculators look for appreciation. You may get greater appreciation in San Fran, but I'd take a 8 or 9 CAP any day over a San Fran 4.