As the attached sheet indicates, apartments sales in the Albuquerque Metro Area have been sporadic at best. In the first seven months of 1998, only 49 transactions totaling 475 units have sold, compared to 1997 with 143 transactions and 2,458 units, which is 30% of the record number of sales in 1993. The following represents a breakdown of apartment sales by product type: Duplex-Triplex & Fourplex Sales Sales in this area have dramatically decreased from the peak transaction volume of 1993 which totaled 240 transactions, marking the 1998 volume of 38 transaction look paltry by comparison. The average price per unit has continued have held its own, and in the fourplex arena have shown a mild increase. The reason? This segment of the marketplace is dominated by two main categories of buyers- the first time investor and the owner-occupant. Our research has shown that the first time investor is currently participating in the Stock Market frenzy, while the owner-occupant interest has waned as housing prices have become more affordable. Case and point - in 1995, Albuquerque was the 13th least affordable city to own a residence in. Centex, Sivage, Oppel/Jenkins, and even AMREP focused their housing product on the middle to upper class. By 1998, Centex, Kaufman-Broad, Artistic Homes, Fuller Homes, and others repositioned their product to appeal to the middle class and lower - with a target housing range of $105,000 to $135,000. Keep in mind that the Dow Jones average hit 4,000 early in 1995, and surpassed 9,000 in April of 1998. 5 to 19 unit Sales Similar to the trend for fourplexes, sales volume for this type of property have been sluggish at best, with 25% of the sales volume that the market witnessed in 1997, and 10% of the market volume in 1993. Much like the fourplexes, this market is dominated by investors who move up and out of the fourplex arena, typically via a 1031 exchange. As the fourplex market waits for a market correction on Wall Street, the 5 to 19 unit community waits for investors to flock back to fourplexes, allowing fourplex owners to release underleveraged equity out of fourplexes and into larger communities. 20 to 49 unit Sales Never considered a hot market, 1998 has witnessed only one sale in the arena: 436 Val Verde, a 26 mostly small unit complex that was sold by our office for $485,000. Although the $/unit has decreased - do not be alarmed as this reflects a lack of a good statistical sample set, rather than a trend in pricing. 50 to 99 unit Sales Sales in this area remain constant, with the exception of 1996 which saw no sales, at three transactions per year. Again, much like the 20 to 49 unit category, there is not a large enough sample set to draw any meaningful data from the average price per unit. Look for this segment of the marketplace to show a dramatic increase in sales in the next 12 months, as we are currently repositioning non profit 501(c)3s to focus their capital into communities of this size. 100+ Unit Sales - or the tale of two towers Although investor interest in this arena is strong, only two sales have occurred in this range - both interesting enough - in high rise product. In a contract that lasted over five years, AIMCO finally closed on the LandMark Apartments purchasing the 102 unit complex for $5.2M in June. The sale of this community was plagued by difficult ownership, construction deficiencies, and a red tag for lack of sprinkler compliance in the mid 1990s. Although each of these issues has been addressed prior to the sale, what makes this transaction unique is the application of OP Units - a REIT only mechanism that allows owners of property to trade their interest in a partnership that has equity in a property for REIT stock, without triggering a capital gain. The Towers on Montgomery also sold in May of 1998, and at the request of the listing agent, we have agreed not to divulge the sales price. Although we have recorded the price in our database, we are hard pressed to use the sale as a comparable for anything but tax protests. At closing, the property contained anywhere between $1M to $3M in structural defects, asbestos abatement, and ADA renovations. The new owners intend to correct the deficiencies of the property and reposition it with higher rents as a senior only community. As our listing inventory has reached an all time high, sellers call our office and ask what they can do to be competitive with the marketplace. Our advice - do not drop price - but be patient while we recover over the plateau that has taken a firm presence in our marketplace. Next Months Issue: market rents, vacancy, and the nations largest builders. Thank you for your continued subscription, Todd Clarke