Q&A with Adam Levin, Executive Managing Director, and Robert Johnston, Senior Managing Director of Levin Johnston Group of Marcus & Millichap
Q: Is the Bay Area in a correction?
A: Single-family housing prices in San Francisco have dropped more than 17% year-over-year according to RedFin. On the multifamily side of the market, deacceleration or stabilization might be better terms. Deal flow has slowed compared to 2022 but following a slow start in Q1 2023 there has been an uptick in investment deals closing. Vacancy rates remain near historical lows at 4.4% while per unit sales prices have nudged upwards though volume is still down due to lower tier buildings providing significant opportunities for investors.
Q: How is the Bay Area multifamily real estate fairing so far this year?
A: The market remains resilient as transaction volume has picked up despite challenging conditions and buyers are actively pursuing well-positioned acquisitions – 9 transactions closed across Greater Bay Area during March alone with similar consistency through Q2 2023 seen since then too. It takes strong networks and effective banking relationships along with ability to identify right properties for connecting qualified buyers which our 30 years experience enables us do strategically on both buy/sell sides within this area’s unique landscape .
Q: Are you concerned about economy for rest of 2023?
A : Media messaging around real estate markets can be negative however we don’t believe it needs be that way – interest rates are high yet not bringing everything grinding halt just slowing things down; sellers adjusting expectations accordingly while buyers need take their time understanding value available before structuring any deal likely involving longer time horizons & less leverage .
Q : When do you see recovery ?
A : Historically , following past slowdowns SFBA was one fastest recovering markets nationally ; employment growing , tech industry expanding soon plus windows opportunity highly scarce when they happen not lasting long making now ideal moment capitalize on current opportunities prior full recovery taking place likely 2024 when interest rate environment stabilizes + massive flow maturing loans works its way through system (CREDiQ estimates $75 billion coming due ’20-’24) . Strong fundamentals ensure region’s appeal as long term investment ensuring savvy investors success throughout entire process .
