Some investors who were waiting for an uptick in the market to unload their income properties are hitting the pause button. 2012 has been a great year for multifamily & income property sales in Chicago. Investor demand is high and inventory is low. Despite this resurgence in the market, a lot of income property owners who rode out the declining market for the past five years in hopes of a brighter day are not really that motivated to sell.
Turns out, some of the same factors that are driving investors to the market in 2012 are benefiting current owners, i.e. low interest rates and a surging rental market. This applies to many owners who purchased closer to market highs too. Balance sheets are beginning to stabilize and kick off some cash, providing positive returns after years of negative returns.
Without a compelling reason to sell, now that the market is finally turning, I would expect a lot of would-be sellers to hold out for another 12-24 months with the expectation that pricing will continue to improve. If we're at the beginning of a new cycle, that could prove to be a good move. If this is just a slight uptick in a declining market, maybe that doesn't matter either. Having low rates locked in and cash-flow positive balance sheets reduces the potential opportunity cost.