San Diego's multifamily sales also bucked the national trend. Sales of apartment properties picked up year-over-year in the United States, notching $147 billion in sales, up from $133 billion in 2017.
Still, there were some signs that pointed to resiliency in San Diego’s capital markets. Per-unit multifamily pricing increased more than $300,000 per door from $285,000. Market cap rates held steady at 4.9 percent, with only negligible compression of a few basis points in 2018.
CoStar’s repeat-sale price index, indexed to 100 at the end of 2008, continued its upward trajectory, reaching 213 at the end of the year. Among all of San Diego’s real estate sectors, that was easily the largest index increase.
Apartment Sales Appear On the Mend
It’s still too early in 2019 to tell if investors will jump back into the market, but the initial indications are positive. With one month still left in the first quarter, sales volume has already nearly exceeded the total achieved in both the first and the third quarters last year.
One sale in particular has gotten the year off on the right foot -- the $141.5 million sale of
Regents La Jolla
is the first institutional-quality apartment property to change hands in a single-asset sale in University City (UTC) since 2012. Raintree Partners acquired the property from LaSalle Investment Management at a price that works out to $424,925 per door at a 4.6 percent cap rate.
However, CoStar does anticipate multifamily pricing to level out over the next year after several years of steady gains. While the index is expected to tick up modestly in 2019, CoStar’s market pricing trends suggests that pricing should fall back below $300,000 per door in 2020 as NOI growth continues to cool. It’s about that same time that CoStar anticipates cap rates will begin modestly expanding.