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.

Rank	2008	2009	Cap Rate Range
1	San Francisco	San Francisco	mid- to high-4 %
2	Seattle	San Diego	low-6 %
3	New York City	Washington, D.C.	5.5 % to 7.0 %
4	San Jose	Los Angeles	mid- to high-5 %
5	Oakland	Seattle	mid- to high-5 %
6	Los Angeles	Oakland	low-6 %
7	Orange County	San Jose	high-4 %
8	San Diego	Orange County	mid-3 % to low-4 %
9	Washington, D.C.	New York City	not stated
10	Portland	Portland	not stated
11	Chicago	Denver	high-6 % to low-7 %
12	Boston	Philadelphia	low- to mid-7 %
13	Denver	Chicago	high-6 % to low-7 %
14	Las Vegas	New Jersey	not stated
15	Fort Lauderdale	Minneapolis-St. Paul	low- to mid-7 %
16	Riverside-San Bernardino	Las Vegas	mid- to high-6 %
17	Salt Lake City	Riverside-San Bernardino	mid- to high-6 %
18	Miami	Salt Lake City	mid- to high-6 %
19	Phoenix	Miami	7 % to 8 %
20	Tucson	Milwaukee	low- 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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