Are Apartment Properties in the Inland Empire going to explode in value?

I talk to commercial real estate brokers in other areas of Southern California, and there may be a wave of cap rates sweeping across the state. This wave may raise the values of apartment buildings in the Inland Empire, and Coachella Valley.

In the general economy, multifamily is doing pretty well. Vacancy rates are very low, and rents are increasing. There's stable demand from new families, seniors, and people who move around and don't need to buy a home.

In the Coastal area of California, cap rates are already very low, in the 4-5% range. In case you forgot what a cap rate is, it's a way of estimating value based on net income; the lower the cap, the higher the value of the property. It doesn't take much movement in cap rates to have a big impact on a property's value.

In the Inland Empire, apartment properties are still commonly exchanged at 6-7%. (Asking prices are different, but you can ask anything you want.) That means that if our cap rates migrate toward those of nearby areas in California, the property values will shoot up. I've seen that happen before.

Investors and agents in other areas are calling me, asking about properties for sale. Palm Springs area apartments are a great investment.