April 2023

Principal's Corner

Multifamily Investment Sales Plummet to 14-Year Low

The multifamily investment market continued to cool in Q1 23. Data research firm CoStar found that apartment building sales have fallen to their lowest levels since 2009. There was $14 billion in transaction volume during the first quarter of this year, which represented a 74% decline compared to Q1 22. In Q1 09, sales plummeted 77% YOY as we headed into the Global Financial Crisis (GFC). These numbers come after the last 2 years of record sale volumes in multifamily. In 2022, volume was $184 billion, compared to the record $223 billion transaction volume in 2021, according to Yardi Matrix. Sales boomed during COVID, as investors took advantage of record low interest rates and poured money into the housing sector generally considered to be a safe harbor in the storm.


Rising interest rates have been the main reason investment sales have stalled. The Fed has raised rates nine times since March 2022. In March of this year, The Fed brought the benchmark Fed Funds rate to between 4.75%-5.00%. These higher rates have caused many investors to hit the pause button as deals have become harder to pencil. Operational costs such as utilities and payrolls have also increased with inflation leading to even more uncertainty in underwriting. Banks have also curtailed their lending amid higher costs and regulatory scrutiny that has intensified with the recent high profile bank failures of Silicon Valley Bank and Signature Bank. Small to mid- size banks hold nearly 70% of commercial real estate loans. Fannie Mae and Freddie Mac are still active in the multifamily arena but have begun to tighten their parameters and raise the debt coverage ratios making it more difficult to obtain leverage.

Edward M. Aloe

President and CEO


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Rent Prices In These 10 Markets Are Falling The Quickest

Rents in Austin are down 11%, while Raleigh leads the charge for rent increases at 16.6%.

The largest declines in median asking rent prices were in Austin, where asking rents dropped 11%, and Chicago, where asking rents dropped 9.2% from the previous year. Last May, Austin had the highest year-over-year increase in rent prices, at 48%, according to Redfin data. This was a result of tech companies relocating to the area and attracting new high-earning residents at a time when mortgage rates were increasing. In the second quarter of 2022, lead data began to show renters looking to move out of Austin. Now, rent prices are normalizing in the city due to curbed demand. 

Cincinnati saw a similarly significant year-over-year rent increase last May, so rents are normalizing there as well. In Chicago, the rental supply increased during the pandemic as new landlords tried to cash in on high rents, and many chose to rent rather than sell at the tail end as homebuying demand decreased, according to Chicago Redfin real estate agent Dan Close. 

In some metros, rents just keep rising, but even the 16.6% year-over-year growth in asking rent in Raleigh doesn’t come close to the increases shown in last year’s data. A thriving tech scene in cities like Raleigh, Charlotte, and Nashville continues to bring new residents in droves, keeping rent prices inflated even as new residential buildings are erected. 

View Article Here

Apartment Market Continues to Loosen, Transactions Pull Back Further Amidst Economic Uncertainty

“Apartment operators reported an uptick in vacancies and concessions this quarter,” noted NMHC’s Vice President of Research Caitlin Sugrue Walter. “And while some of this softness can be attributed to seasonality, investors remain concerned about the coming wave of supply in some markets and the prospect of slower economic growth in 2023. Only 11% of Quarterly Survey respondents believe that the Fed will be able to achieve a soft landing this year in its effort to rein in inflation.

“The transaction market, meanwhile, remains at a virtual standstill, with current apartment owners unwilling to offer buyers the lower prices necessary to compensate for both this diminished economic outlook and the elevated cost of debt.”

The Federal Reserve remains committed to bringing down inflation via tighter monetary policy, thereby raising the prospect of slower economic growth. A majority of Quarterly Survey respondents (64%) believed that a “bumpy landing” is the most likely scenario, where growth slows to a below average or negative rate and then rebounds to a sustainable pace. Twenty-one percent of respondents thought that the Fed’s actions will lead to a “hard landing”, or recession scenario, while just 11% predicted a “soft landing”, where economic growth simply slows to a more sustainable pace.

View Article Here

Mortgage rates rebound after five straight weeks of declines

Rates ticked upward due to a still-resilient economy and pressures from the MBS market

“Mortgage rates are the product of the larger economic environment, including inflation and employment data as well as banking stability and the Fed’s actions,” Hannah Jones, economic data analyst at, said in a statement. “Recent data points to a still-resilient, though cooling economy, leading many to believe the Fed will elect to raise the target rate at next month’s meeting.”  

Mortgage rates are following the gain in the 10-year Treasury, which moved from 3.2% in the first week of April to 3.6% this week, according to George Ratiu, the chief economist at Keeping Current Matters. 


“Investors are weighing the softening consumer sector and inflationary pressures, along with the shifts in real estate markets, looking for more clarity on the outlook,” Ratiu said in a statement. “Inflation remains a concern, keeping the Fed in a hawkish position, poised to push the policy rate up by another 25 basis points at its May meeting.”

View Article Here

On the lighter side....
About CALCAP Advisors


California Capital Real Estate Advisors, Inc., and its affiliate entities (CALCAP Asset Management, CALCAP Properties, CALCAP Lending, CALCAP Senior Healthcare, and CALCAP Strategic Opportunities, collectively known as “CALCAP”), is a California-based investment company founded in 2008 and headquartered in Pasadena, California. The Company sponsors alternative real estate investment opportunities focused on demographically driven housing. CALCAP has been able to consistently provide both individual and institutional investors with outstanding returns over the last 14 years. The Company uses a highly selective and disciplined investment approach, focused on delivering superior risk-adjusted returns. CALCAP currently has over $650mm in Assets Under Management. To learn more visit

Social Mission

CALCAP CARES is a 501(c)(3) private foundation organized to encourage employees to find a way to give back to the neighborhoods where we invest. CALCAP has created "GiveTime4Autism" as its initial program which gives employees the opportunity to donate unused vacation and sick days for a very worthy cause.


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Edward M. Aloe, Founder & CEO
(626) 229-9057

Patrick A. Wakeman, Principal
(858) 764-4890

Drew Buccino, Principal and COO
(602) 419-3381

Greg Blix,Dir. of Investor Relations
(805) 896-8500

Tim Landwehr
Executive VP, CALCAP Lending, LLC
Mark A. Mozilo, Principal
(626) 229-9056

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