Reflecting the slowdown is the widening gap between what sellers are asking for their properties and what buyers are willing to pay.
Commercial price growth slowed sharply in all sectors across all regions in September, according to the latest CoStar data.
Notably, while investment capital has remained strongly focused on the multifamily sector throughout the third quarter, it is the property type where the difference in pricing expectations between buyer and seller also has widened more quickly and further than others, CoStar sales comparables show.
“Multifamily has been hit with two big issues in the second half of this year,” said Jay Lybik, national director of multifamily analytics for CoStar. “One issue is the significant rise in the cost of debt. The second is the dramatic decline in rent growth projections. These two forces combined are causing the rising difference between asking and closing prices for multifamily.”
CoStar’s apartment rent data, powered by Apartments.com, shows third-quarter year-over-year rent growth slowing from an average increase of 9.4% at the end of the second quarter to an average increase of 5.8% last month.