By Chelsea Shapiro, Senior Broker


We live in a 24/7 real time, instantaneous kind of world, but in the real estate industry most things operate on a 90 day cadence.  Why?  That’s often the timeframe it takes to get a property ready for market, under contract and closed.  It’s also deemed a market cycle and when data from consecutive months becomes meaningful.  All Summer, we have been noting the shifting forces in the market (primarily driven by interest rates increases and the responses they trigger). We've been feeling buyer and seller trends dramatically change, and now seeing the data that backs up and codifies a different real estate market than 90 days ago.  



In the tri-county area, the average "Days On Market" has increased, the number of sales have dropped, and the months of inventory has gone up dramatically (see data below).  Depending on the County we are in a “Balanced Market” and trending in the direction of a “Buyer’s Market.” 


Interest rate increases have been the driving force behind this shift, and the Federal Reserve has promised more rate hikes this year and into next.  To illustrate how that impacts pricing, we’ll dissect a 4plex deal we sold last Spring.  See below for the difference between then and now.  



It’s a challenging and shifting market for sure, so Why Buy?  Many successful real estate investors made their money by picking up properties during the last downturn (2008-2013).  After years of fierce competition and bidding wars, buyers now have leverage to find and/or create a good deal.  We think the next few years will be a great time for acquisitions.  It might take some ingenuity to compensate for the expensive financing, but that’s where creative lending solutions become optimal, and most lenders are predicting rates to drop after 2023 so refinancing is always an option.  The one caveat is hold time - a flip or quick value add play is tough to pull off in a receding market, but as long as buyers are prepared to hold long term buying now is great idea! 


If we’re in a down market Why Sell?  If you don’t have to sell and are primed to achieve cash flow and hold for many more years, then our recommendation is to hold.  However, if you’re needing to sell in the near future now is your last chance to capture some of the massive appreciation our region has experienced in recent years.  For context; this market downturn should not be anywhere near as bad as 2008-2012, but using that timeframe as an example, it took almost 10 years for Pierce County multifamily property values to get back up to the values they were at during the previous peak of 2007 (see graph below). That said, it could take several years for values to get back up to where they are today. “Waiting for the market to turn round” may not be the best option for anyone planning on selling in the next couple of years. We are still very close to the top of the market! Multifamily values in Puget Sound Region more than doubled over the last 5 years. If you purchased your property more than 3 years ago, selling today would still be a huge win!


Whether buying or selling, make sure you employ an experienced and knowledgeable broker!  This is a tricky market to navigate and having a seasoned broker who can suggest creative and solid strategies on your team might make all the difference in your ROI.