SoCal Multifamily Sales Pulse - May 1, 2022 - May 7, 2022
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Here's What's Happening In The Market, Here’s What This Means For You
More Research Shows Cap Rates Likely to Keep Compressing
Multifamily, industrial, retail, and office will all feel continued pressure, NAR says. Opinions are starting to pile up that commercial real estate will remain hot, prices will rise, and as a result cap rates will fall.
The National Association of Realtors released an analysis that said cap rates were likely to keep compressing in 2022 despite rising interest rates.
Although typically rising interest rates would push up mortgage costs, creating downward pressure on property prices, that may not be the case, at least for now, because other factors keep pushing prices up and, in turn, further compress cap rates.
Multifamily units as well as single-family rentals and build-to-rent units will see greater demand as higher mortgage rates and house prices expand the pool of people who are no longer able to buy a home. The greater the demand, the greater the potential rent, and investors are buying future rent rolls.
The Pulse of the Market
The Average Days to Sell dropped in just about every county to the fewest days on the market ever. The Average Days to Sell for the entire Southern California area was just 33 days last month. Similar to the prior week, last week saw a very slight increase in inventory in all counties except the Inland Empire. So, the overall trajectory is up. Cap rates and gross rent multipliers haven’t changed much if at all since the beginning of the year, although that is expected to change as we move through the year. The monthly Absorption Rates for last month increased in every county except the Inland Empire, where Riverside County was unchanged and San Bernardino County was the only county with a lower Absorption Rate.
WHAT TO EXPECT: As I’ve been saying, we probably won’t see much of a change in market conditions until there are at least 1-2 more anticipated interest rate increases. Inventory will continue to increase gradually and prices should keep increasing gradually also. The Inland Empire area will continue to be the hot spot for investors looking to see the highest percentage increases in rents and values. San Diego County will also see strong demand as Average Days on Market continues to be the lowest in Southern California.
Orange County
The Orange County monthly Absorption Rate moved from 1.27 months previously to 2.18 months currently. The monthly stats for Orange County multifamily saw the Days to Sell Average drop to its lowest point ever. The overall Number of Active Listings was up slightly. This stat includes listings that are Active Under Contract and Pending. There has been an increase in the monthly Number of New Listings the last 2 months and overall the trend has been up for the last 5 months. The monthly Number of Sales dropped last month as this stat has been up one month and down for the last 11 months.
Live MLS and Sale of the Week Link expires in 30 days after published View Live MLS Data View PDF Version
Long Beach
The monthly Absorption Rate for Long Beach went from 1.79 months previously to 2.6 months currently. For the Long Beach multifamily monthly stats the Average Days to Sell dropped to its lowest point ever at just 23 days. There was a slight uptick in the Number of Active Listings after seeing a decline in the two previous months. The monthly Number of New Listings was up for the third time in the last 4 months. The Average Price Per Sq. Ft. continued its overall trend upward and has gradually increased over the last 4 years. The monthly Number of Sales stat was down slightly but still about the same as it has been for the last 4 months.
Live MLS and Sale of the Week Link expires in 30 days after published View Live MLS Data View PDF Version
Los Angeles County
Los Angeles County multifamily monthly Absorption Rate went from 3.17 months previously to 3.48 months currently. Monthly stats for LA County, the Days to Sell Average was lower for the second consecutive month after increasing each month in the prior 5 months. The Number of Active Listings was up again last month and has been for the last 3 months. The monthly Number of New Listings has remained almost unchanged for the last 3 months. The monthly Number of Sales was down slightly after a significant increase in the prior month.
Live MLS and Sale of the Week Link expires in 30 days after published View Live MLS Data View PDF Version
San Diego County
San Diego County’s multifamily monthly Absorption Rate went from a low of 1.48 in the previous month to 1.93 months last month. The biggest surprise is the monthly Days to Sell Average for San Diego County. This came in at just 11 days last month. And with the Number Active Listings saw an increase for the fourth consecutive month. The monthly Number of New Listings was down slightly after a pretty significant increase in two of the last four months. The monthly Number of Sales increase slightly last month as has been up over the last 2 months after falling in the 2 months prior to that increase.
Live MLS and Sale of the Week Link expires in 30 days after published View Live MLS Data View PDF Version
Riverside County
Riverside County multifamily monthly Absorption Rate was unchanged from the previous month at 2 months. The monthly charts show the Days to Sell Average increasing over the last 3 months, but just slightly overall. During the same time, the Number of Active Listings has declined. Last month we see the monthly Number of New Listings has increased after falling in the previous 2 months. The Average Price Per Sq. Ft. continued it upward trajectory again last month and except for the one-month anomaly where it shot up, the trend has been up over the last 4 years. The monthly Number of Sales was up slightly from the previous month and has remained pretty consistent over the last 3 months.
Live MLS and Sale of the Week Link expires in 30 days after published View Live MLS Data View PDF Version
San Bernardino County
San Bernardino County’s multifamily monthly Absorption Rate went from 2 months in the previous month to 1.81 months last month and was the only county that had a lower monthly Absorption Rate in Southern California. Looking at the monthly stats for San Bernardino County the Days to Sell Average was down to 34 days which is the third-fewest days to sell in the last 4 years. The Number of Active Listings was down for the second consecutive month. and has seen a downward trend for about the last 12 months. The monthly Number of New Listings has been down for the last 2 months after increasing in the 2 months prior. The Average Price Per Sq. Ft. was up considerably last month and the overall trend has seen quite an increase over the last year and a half. The monthly Number of Sales saw its second consecutive increase after falling in the prior 2 months.
Live MLS and Sale of the Week Link expires in 30 days after published View Live MLS Data View PDF Version
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