SoCal Multifamily Sales Pulse - April 24, 2022 - April 30, 2022

• 02 May 2022
• Mike Lembeck

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Here's What's Happening In The Market, Here’s What This Means For You

Commercial Property Sales Increased by Double Digits in 1^st Quarter 2022

Commercial Property Sales Increased by Double Digits in 1^st Quarter 2022 according to Real Capital Analytics. Retail was a strong winner in the first quarter, with deal volume increasing 102% in the first quarter. The deal flow is appearing to continue apace despite the rising inflationary pressures and mounting geopolitical tensions that have been on the lips of most industry insiders over the last few months. Apartment transaction activity increased by 64% in March year over year and by 56% in the first quarter of 2022 versus the first quarter of 2021.

The Pulse of the Market

It’s still a seller’s market. We’re seeing strong demand from investors and short days on market. And we’re still seeing a lot of transactions where the property sells for at or above the asking price. So far, any interest rate increases have had little to no effect on investors’ appetites. There may be another increase coming this week. With the fluctuations in the stock market lately real estate continues to be just about the best investment out there. The first sign of a market slow-down will show up in the Active Under Contract and Pending Sales stats. So far there’s been little change in either of those statistics.

WHAT TO EXPECT:
We’ve started to see a small increase in inventory over the last 2-3 weeks. I anticipate this will continue now that there are hints of larger and more frequent interest rate increases on the horizon. The Inland Empire was the only area that saw declining inventory levels. With higher construction costs deterring builders from adding more inventory it could be a slow process for an increase in inventory and how it might affect prices. In the short term, I’m expecting the market to remain the same or similar over the next 3 months. Long term, depending on the amount and frequency of interest rate increases I’m expecting an inventory increase as we move through the year and into 2023. Anything after that is guesswork because you never know what can happen with potential situations currently at the top of the news.

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