SoCal Multifamily Sales Pulse - May 8, 2022 - May 14, 2022

• 05 July 2022
• Mike Lembeck

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

Multifamily Investment Soars To New Heights

Multifamily investment in the first quarter hit an all-time high, accounting for the strongest first quarter on record and increasing 56% year-over-year to $63 billion.

That figure brought the trailing four-quarter total to $374 billion. The multifamily sector accounted for 37% of total commercial real estate investment volume in the first quarter, followed by office at 21% and industrial at 20%.

Strong investor appetite compressed the average multifamily cap rate to an all-time low. With continued strong rent growth throughout every Southern California market, ranging from 14% to 18% year-over-year, investors are drawn to multifamily opportunities, despite rate pressure.

Strong multifamily fundamentals persist, with favorable migration trends, high household formation, and strong wage and job growth contributing to continued demand. An abundance of equity and debt capital remains available, albeit at significantly higher rates than enjoyed in the past few years.

The Pulse of the Market

Most areas are seeing the majority of the transactions with properties selling at or above the asking price. If you’re a buyer looking at investing in So Cal multifamily you will need to be willing to be aggressive and pay list price or over list price to secure a deal. Inventory levels continue to creep upward ever so slowly. This should continue throughout the year.

WHAT TO EXPECT:
I expect more of the same over the next 2-3 months. A slow steady increase in inventory and a lot of competition between buyers for available inventory. There might be a slowdown in inventory coming to market as we enter the holidays but that will be determined by the market, economy, and inflation.

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