After spending 5 years in the electric bike business and running one of the most successful private dealers in the country, I’ve found it important to stay flexible with expectations. It was difficult to not continue to think that our Covid boom would continue but following trends always helps keep us grounded. As I migrate my career to commercial and multifamily real estate I try to utilize the same thought process when I look at sales volume vs market demand and contributing factors like price and availability. Here is what we are seeing in the 2-4 multifamily unit space (data pulled from the MLS).

2-4 unit sales are still behind compared to 2020 multifamily property investing levels, and even if we look back to 2019 we still had 59 sales compared to 2023’s May with 26. We could potentially look at investors saying “this doesn’t pencil” as the sold count drops and price points have changed from $853,645 (2019) to $1,140,769 (2023) on average per sale.

Neighborhood Scout’s report shows the annual San Diego appreciation rate at 5.27%. When we look at the appreciation rate from 2019 to 2023 (21.08% combined) compared to average sale price (2019 to 2023) we see an increase of the average sale price increase to 33.65%. That means price has outpaced inflation by 12.57%.

When it comes to 5+ unit multifamily real estate sales (data from CoStar) we are almost in the identical place we were in 2020. It would seem that the market for 5+ has just reset. Pricing hasn’t changed with inflation and we should potentially see this start to see slight growth in regards to average sale price but not in the volume we saw in 2022 (62 sold).

Overall, the numbers below are there to paint a picture of where the multifamily property investing market is at. When pricing your property for sale, depending on your urgency, you’d be better suited to price the 2-4 unit property off 2019 comps then add proper inflation. For 5+ you can safely assume the average price point should be compared to May 2020 with moderate inflation increases. 

See data below for 2-4 units and 5+ units.

MLS Updates 2-4 units

May 2023

• • 26 sold

• • Average days on market – 15

• • Average sale price: $1,140,769

• • Total sold price: $29,660,000 (list $29,244,299)

May 2022

• • 62 sold

• • Average days on market – 27

• • Average sale price: $1,361,496

• • Total sold price: $84,412,763 ($84,899,399)

YTD 2022

• • 321 Sold

• • Average days on market – 21

• • Average sales price: $1,399,855

• • Total sold price: $449,353,486 ($441,858,232)

YTD 2023

• • 175 sold

• • Average days on market – 32

• • Average sales price: $1,298,738

• • Total sold price: $227,279,236 ($230,731,586)

Jump back to 2020

YTD 2020

• • 175 sold

• • Average days on market – 34

• • Average sales price: $941,955

• • Total sold price: $230,779,050

MAY 2020

• • 66 sold

• • Average days on market – 34

• • Average sales price: $961,652

• • Total sold price: $63,469,070

CoStar 5+ Date

May 2023

• • 20 sold

• • Average sales price: $3,256,664

• • Total sold price: $65,133,282

May 2022

• • 48 sold

• • Average sales price: $8,084,996 (127 mil outlier removed)

• • Total sold price: $388,079,817

YTD 2023

• • 103 sold

• • Average sales price: $7,380,988

• • Total sold price: $730,717,782

YTD 2022

• • 184 sold

• • Average sales price: $10,361,318

• • Total sold price: $1,906,482,528

Jump back to 2020:

YTD 2020

• • 119 sold

• • Average sales price: $6,149,618

• • Total sold price: $731,804,600

May 2020

• • 19 sold

• • Average sales price: $3,550,757

• • Total sold price: $67,464,381