Home Front

A blog about the economy and the Sacramento-area real estate market.

January 23, 2009
Apartment values/sales follow houses into the slow lane

 I had an interesting visit in Roseville this morning with a pair of Northern California apartment industry specialists, John Gallagher and Dean Bagneschi, partners in the Apartment Advisory Team at TRI Commercial.

 Here at The Bee, we do a ton of stories on the housing market, but don't often enough explore the world of apartments that house an estimated 35 percent of the region's population. That's sort of a hidden world to many, a world of big institutional funds and insurance companies and local families with money that buy and sell apartment complexes.

The bottom line right now: the apartment industry is slumping, too. Sales prices are falling, a few have fallen into foreclosure and buyers are waiting on the sidelines to see if prices fall more, the two said. There's still more supply than demand, which has lessened investor interest, too, in apartments.

  There's also the issue of credit. Even when brokers like them can put together a buyer and a seller it's hard to get the bank on board. They said Citibank used to be the biggest regional source of loans for apartment deals. Number two was Washington Mutual. Between them, they represented 75 percent of the region's financing.

Now both banking giants are struggling with their loan portfolios and have largely stopped lending in this realm, they said. The deals are there, they said. In some cases a buyer can pick up a complex for half of what it would cost to build the same thing new.

But the financing is the hard part.

Truly, if you ever wanted an example of what it means here on Main Street when the analysts talk about a freeze-up in credit markets, this is it.

Apartment complex buyers who used to make 25 percent down payments are now being asked for 40 percent down if they want to get a loan. So they're reluctant on that front, too.

All in all, it's hardly the express lane in their business sector.

Like everyone else, they're waiting for the state government to stabilize, for job growth to pick up and people to move here. In short, anything but the constant reports of layoffs and threats of layoffs that are keeping many buyers - even of apartment buildings - on the sidelines, waiting, waiting to see how the economy shakes out.

Like to hear it in their own words? Here's a brief video of Gallagher and Bagneschi after coffee Friday morning at The Fountains in Roseville.


About Comments

Reader comments on Sacbee.com are the opinions of the writer, not The Sacramento Bee. If you see an objectionable comment, click the "report abuse" button below it. We will delete comments containing inappropriate links, obscenities, hate speech, and personal attacks. Flagrant or repeat violators will be banned. See more about comments here.

What You Should Know About Comments on Sacbee.com

Sacbee.com is happy to provide a forum for reader interaction, discussion, feedback and reaction to our stories. However, we reserve the right to delete inappropriate comments or ban users who can't play nice. (See our full terms of service here.)

Here are some rules of the road:

• Keep your comments civil. Don't insult one another or the subjects of our articles. If you think a comment violates our guidelines click the "report abuse" button to notify the moderators. Responding to the comment will only encourage bad behavior.

• Don't use profanities, vulgarities or hate speech. This is a general interest news site. Sometimes, there are children present. Don't say anything in a way you wouldn't want your own child to hear.

• Do not attack other users; focus your comments on issues, not individuals.

• Stay on topic. Only post comments relevant to the article at hand. If you want to discuss an issue with a specific user, click on his profile name and send him a direct message.

• Do not copy and paste outside material into the comment box.

• Don't repeat the same comment over and over. We heard you the first time.

• Do not use the commenting system for advertising. That's spam and it isn't allowed.

• Don't use all capital letters. That's akin to yelling and not appreciated by the audience.

You should also know that The Sacramento Bee does not screen comments before they are posted. You are more likely to see inappropriate comments before our staff does, so we ask that you click the "report abuse" button to submit those comments for moderator review. You also may notify us via email at feedback@sacbee.com. Note the headline on which the comment is made and tell us the profile name of the user who made the comment. Remember, comment moderation is subjective. You may find some material objectionable that we won't and vice versa.

If you submit a comment, the user name of your account will appear along with it. Users cannot remove their own comments once they have submitted them, but you may ask our staff to retract one of your comments by sending an email to feedback@sacbee.com. Again, make sure you note the headline on which the comment is made and tell us your profile name.

hide comments

On October 14, The Sacramento Bee will temporarily remove commenting from sacbee.com. While we design the upgrade, we encourage you to tell us what you like and don't like about commenting on sacbee.com and other websites. We've heard from hundreds of you already and we're listening. Please continue to add your thoughts and questions here. We also encourage you to write Letters to the Editor on this and other topics.

Jim Wasserman on Twitter

Follow "jimwasserman" on Twitter

October 2013

Sun Mon Tue Wed Thu Fri Sat
    1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30 31