I wanted to share some thoughts on multi-unit housing as I’ve been tinkering with some data in the Arden-Arcade area. I’m doing a retrospective valuation for tax purposes, which essentially means I’ll be providing an appraised value for a date in 2006 even though it’s 2012. While I remember appraising in the market six years ago, it’s still amazing to look back now and see how many of the “comps” then have ended up reselling for half as much as they did during their height.
Some takeaways from 2-4 unit sales over the past decade:
- A fourplex clearly does not always equal twice the value of a duplex.
- Real estate is all about location. While it might be surprising to see many duplexes selling at higher levels or competing with fourplexes, it’s important to realize many of the fourplex units sell for less because they are located on streets with nothing but fourplex units. These “rental row” streets are often hotspots for lower values.
- The graphs really show clearly how the market has been stabilizing over recent time. There has generally been an uptick in the multi-unit market lately too (just as there has been in the single family market in Sacramento).
- There are quite a few traditional sales and listings right now. While there are surely foreclosures and short sales, the bulk of sales have been traditional (either flips, long-time investor-owned sales or investors selling at a loss from paying cash years ago).
Question: If you had the cash right now, would you buy a duplex or fourplex?
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