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The Ups and Downs of a Changing Marketplace
12 JULY+AUGUST 2022 / EBRHA.COM
interest rates by reducing the money supply (i.e., stopping the Fed’s balance sheet expansion for now and eventually raising Federal Funds interest rates to banks and lenders). As capital becomes scarce, it will flow away from risk into safety and terms offered by banks will follow. Recently, a prospect for our listing at 22 Domingo, a 15-unit property in Rockridge, saw loan quotes change rapidly over a span of six weeks. Interest rates on a five-year fixed loan from
the same bank rose from 4% to 5% and LTV decreased from 60% to 50%. This bites into returns for investors and lowers their willingness to pay (i.e., reduces prices). In the near future, this may lower valuations but will eventually be offset by higher rents as owners pass along inflation. Looking into Zumper’s May 2022 rents, New York has jumped to the top spot at $3,590/month in median rent for a 1-bd/1-ba unit, San Francisco slid down to second at $2,900, and
SATAPORN/ADOBE STOCK
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fter the East Bay region bounced back to the tune of a 98% year-over-year rise in the total sales volume for East Bay Multifamily properties of 5+ units (an outlier among surrounding regions), rising interest rates look set to bring a healthy balance to market dynamics. Inflation, as measured by the national Consumer Price Index (or “CPI”) recently reached 8.1%, prompting the Federal Reserve to begin raising effective
By Robert Chappell, NAI Norcal
