The Billion Dollar Question?

Data and statistics published this week by Loopnet, the Commercial Real Estate Listing and Comparable Data Website, shows that Orange County Multi-family housing experienced the most significant decline in transaction volume of any type of Commercial property. From their 2007 4th Quarter peak at over $1 Billion Dollars in Sales, Multi-family housing sales have dropped to a 2009 1st Quarter volume of just $4 Million Dollars.

Plagued by weak fundamentals, including: decreasing rents, increasing concessions and higher vacancy rates, the apartment market has suffered nationwide. In Southern California , the shadow market created by rental and for-sale REO Properties, as well as job losses and the credit crunch have put an even bigger damper on consumer spending. Looking to save money, renters are downsizing and/or doubling up.

Long term projections which include the fundamentals of population growth and increase in household income remain strong. That said, short term speculators have abandoned the marketplace. True value is available to the sophisticated investor/manager who is capable of realizing the immediate value in an asset by guiding it through turbulence and realizing that yes, it will definitely get worse before it gets better.

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