B.C.'s multi-family investment sector is picking up steam after hitting a new low in the fourth quarter of 2008, according to Avison Young's first quarter multi-family investment report.
Seventeen deals worth $59.3 million were made in the first quarter compared with only seven worth $29.9 million in 2008's fourth quarter.
Avison Young principal Rob Greer said the consistent, low-risk returns of multi-family investments coupled with historically low financing rates contributed to the increased sales in the first three months of 2009.
The report noted that mortgages insured by the Canadian Mortgage and Housing Corp. are available at around 3.5%, which is far lower than rates in the high 4% to low 5% range 12 months ago.
Rates might fall even further with the Bank of Canada's announcement Tuesday morning that it lowered its target overnight rate to a historic low of 0.25%. Shortly after the announcement, all the major banks lowered their prime rates and mortgage rates.
Despite the increased deal activity, sales are still down from a year ago and well below volumes experienced over the past five years. The number of sales and the total volume of sales have fallen roughly 35% from figures in 2008's first quarter.
Avison Young suggests that sales might not rebound to previous levels until sometime next year as the bid-ask gap between sellers and buyers remains relatively high despite prices for multi-family units falling between 10% and 20% from its peak in mid-2008.
Michael Brodie, an Avison Young multi-family investment adviser, said, "Some vendors are still looking to achieve yesterday's prices in today's environment."