Sales of Multi-Unit Buildings are Way Down

All aspects of the housing market have been hit hard in one way or another. In San Francisco, an area that hasn't been much talked about are small, multi-unit properties (2-4 units). The average sales price of all 2-4 unit buildings which sold this May is down 30% compared to where it was a year ago. That's more than double the decline in average sales prices for single family homes and condos.

What's worse is the decline in the number of sales. A year ago in May 47 buildings sold. Compare that to just 25 last month. In February this year, no (as in zero, none, nada) 3-unit buildings sold. In March no 4-unit buildings sold. Granted, these months are historically slow but this was no statistical glitch. In the past three months we've averaged only 3 sales of 3-unit buildings. There are 84 on the market! That's more than a 2-year supply!!

The situation is just as bad for 4-unit buildings. There are 40 on the market and we're only averaging 2 or 3 sales a month.

This is not a healthy situation for owners or, ultimately, their tenants.

A large part of the problem is the difficulty in obtaining financing. If you think it's tough to qualify for a single family home or condo mortgage, try arranging for a mortgage on an investment property.