While apartment building values are not driven by the same market factors that move housing prices, there is an undeniable correlation between the two asset classes. When single family home prices begin to slow, apartment building owners should take notice.
Home prices across the country continued to decline for the first part of 2014, according to data released recently by NAR and Case-Shiller. Despite the fact that last year was the best year on record for the Home Price Index since 2005, the dip has already increased concern that the market is slowing. Some economists attribute much of the slowing to seasonal factors. This information correlates with other data showing that the market is slowing- the National Association of Realtors Existing Home Sales report, showed a 5.1% decline in sales activity in January, and the National Association of Homebuilders also indicates a similar decline in builder confidence. National Home Price Index vs. San Francisco Home Price Index With Febuary being the fourth consecutive month that sales activity has decreased nationwide on a monthly basis, many institutional buyers are beginning to show some hesitation. While nationwide the index drops, San Francisco still shows growth, reminding us that real estate indicators and cycles need to be examined regionally.