The State of Multi-Family Real Estate Market in Roslindale

Posted by: Tim White
Posted on: Saturday, July 21, 2007 at 11:55 am
Categories: Financing, Home Selling, Home Buying, Market Conditions, Roslindale

As any owner of a multi-family dwelling in Roslindale can tell you, especially those few who have recently sold or the many who are currently attempting to sell their properties, the real estate market for “multis” as such is tough going.  The reports coming in from agents in the Roslindale field who are working with multi-family buyers and sellers correspond pretty much with what the trend reports and statistical analysis are telling us–this market segment is presently stagnant.  In other words, every key market indicator–median sales price, supply and demand by number of units, and sales rate/monthly supply of inventory–coupled with our trusted “in the street” sources support this argument.  If there’s another reality out there I’d love to hear about it because I do not like being the bearer of bad news. 

For those of you interested in understanding why the multi-family market in Roslindale is a flat as it is, I can point to a confluence of contributing factors.  The antics of the sub-prime lending market over the past few years, a lackluster rental market, the condo conversion craze which spewed forth an oversupply of inventory, unsustainable appreciation rates, and ultimately the inability of multi-family properties owners to see a reasonable return on their investments no matter if they decide to rent or convert to condos–all of these factors have contributed to a weakening market segment.

A solution to the present condition of the multi-family market segment can only be found after a cold examination of the facts, some of which include:

Median Sales Price for Multi-Family Properties in Roslindale Over the Past 24 Months

median-price.jpg

Of all the key market indicators used in evaluating the condition of a market segment, the median sales prices over time is perhaps not the best measurement of the present state of the market, but it is still relevant when used in conjunction with other key indicators in terms of understanding where the market is as a whole.  The graph above illustrates a consistently downward sloping trend-line over time in terms of median sales prices.  By the numbers it shows that in June ‘05 the median sales price for multi-family properties in Roslindale was just over $600,000, however in June 0f ‘07 the median price is at $450,000 representing a 23% decline in value.  It also reveals that the average days on market (DOM) has nearly doubled. 

Supply and Demand by # of units for Multi-Family Properties in Roslindale Over Past 24 Months

supply-and-demand.jpg

Supply and demand by # of units is another key market indicator that speaks to the fluidity of a market segment.  Specifically to the number of properties for sale versus the number of properties that have gone under contract on a month-by-month basis.  Here, again, the news for multis in Rozzie is not great.  Over the past 2 years the amount of multi-family inventory has steadily increased while the number of properties going under contract has remained flat or has shown a slight decrease in number.  For example, in June of ‘05 there were 42 properties listed for sale with 8 going under contract.  In June of ‘07 there were 57 for sale with only 3 going under contract. 

Sales Rate by Monthly Supply of Inventory for Multi-Family Properties in Roslindale for Past 24 Months

sales-rate-msi.jpg

The term “sales rate” is used to describe the relationship between inventory for sale and inventory sold in the from of a mathematical equation.  It is often expressed in terms of the current monthly supply of inventory (MSI) which basically means that in any given month, if no additional inventory were added to existing levels, how many months out would the current supply last.   Presently, in Roslindale existing levels of inventory for multi-family dwellings are projected to last 8.5 months based on June ‘07 figures.  In June ‘05 the MSI was at 3.5 months.

As I mentioned earlier, and as the evidence suggests, the real estate market for multi-families in Roslindale is indeed tough.  The best professional advice I can offer property owners in this market segment is to consider the facts as illustrated above and to come to grips with the market realities as best they can, and then adjust their expectations accordingly.  Basically, motivation is key to selling in this market, and if the motivation is there then the next step is to price the property aggressively.  There are plenty of buyers circulating in the market but they are only going to act if the price is right. 

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Comments

3 Responses to “The State of Multi-Family Real Estate Market in Roslindale”

  1. maureen rossi on July 24th, 2007 5:29 am

    Hi Tim,
    One of the locals TV stations, this AM 7/25/07, had a piece on the local real estate market, they must have read your blog!

  2. DW on July 31st, 2007 1:22 pm

    HI Tim,

    Does this data reflect all multi-families including up to 6 units? According to my research the depreciation rate for 2 families is lower year over year.

  3. carole white on August 1st, 2007 8:09 am

    The data here is pulled directly from the Multiple Listing Service of Mass. I believe their criteria for Multis includes up to 6 units but I will have to check. However, if they don’t I still think the numbers are accurate as there would not be so many 6-unit multis in relationship to all other categories of multis to skew the numbers all that much.

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