Multi-Family Home Sales are on the Rise in Cambridge

If you are thinking about investing in a multi-family home in Cambridge you will have to act quick. Currently there are only 6 multi-family homes for sale in the entire city of Cambridge.

Why are multi-family properties so hot?

There are many advantages to owning multi-family homes. When you have a multi-family you have multiple tenants and that means you have multiple revenue streams. If you lose one tenant, it’s not the end of your business.  There are also many tax advantages to owning a multi-family property including deductions like mortgage interest, property expenses and depreciation.

So how hot is the multi-family market in Cambridge?

A good indicator to measure the real estate market is to determine the absorption rate. The absorption rate is the rate at which the inventory of homes are being sold. Absorption rate indicates the number of months it should take to sell all the homes for sale in a specific area.

An absorption rate of more than 8 months is considered a buyer's market.

An absorption rate of between 5-7 months is considered a balanced market.

An absorption rate of less than 5 months is considered a seller's market.

Let's look at the absorption rate for multi-family homes in Cambridge:

First, we we will look the time period between January 19, 2013 and April 19, 2013.  During that time period  (90 days) there were 15 multi-family homes sold in Cambridge.

Divide 90 (days) by 15.

That number is 6. That means that 6 multi-family homes are selling every day in Cambridge.

Next, we determine the number of active homes for sale. As of today, April 19, 2013 there are 6 active multi-family homes on the Multiple Listing Service in Cambridge. For this calculation, I did not include homes that are listed as having a pending offer or under agreement, there are currently 15.

Now we multiply the number of active homes (6) by the rate at which homes are selling (6).

6 x 6 = 36 days.

To find the absorption rate in months divide  36 by 30 days per month = 1.2 months.

What does all this mean?

There is only 1.2 months of inventory. So, if you have a multi-family in Cambridge and put it on the market today it should only take about 6 weeks for it to sell. If you are looking to buy a multi-family in Cambridge you better act quick!

Guy Contaldi helps clients sell and find homes for sale in Boston, Cambridge and the surrounding communities.