Wasilla Four Plex Sales
Jay was working on a CMA for a four plex and came across a surprising statistic. So far this year in the Palmer and Wasilla areas there have been only 5 sales of fourplexes, and 4 of them were foreclosures. These fourplexes sold for a median price of $220,000.
There are currently 13 fourplexes for sale in the same Palmer/Wasilla area. They are being offered at a median price of $325,000. It’s easy to see that there is about 2 years worth of inventory on the market. There is also a large gap between the expectations of the sellers and the buyers. Sellers are still expecting to get a price that is only possible in a hot market.
During the relatively hot market of 2003–2005 people were purchasing four plexes at prices higher than the rents justied. They were counting on appreciation and tax benefits to make up for their loss on the rental income.
Appreciation has stalled for the time being. Fourplex buyers have also stalled. They are still willing to buy but the deal needs to make sense, or is that “cents”. It isn’t normal for an investor to purchase a property knowing that it will lose money for the forseeable future. Unless the current rental income after all expenses currently shows a profit the buyers will stay on the sidelines.
At the same time there is some indication that rents may begin to rise. I talked to someone who advertised a two bedroom apartment on craigslist just yesterday. They received over 20 inquiries in one day.
While real estate sales have declined, our population has not gone down. The people have to live somewhere and many of them are renting. Rental prices will likely increase as a response.
It may be a good time to purchase a multi-family unit…just do it carefully and find one that makes “cents”. If you would like any help looking give me a call. 907 232–7900.