SoCal Multifamily Sales Pulse - October 10, 2021 - October 16, 2021
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Here's What's Happening In The Market, Here’s What This Means For You
2022 Could Be When Apartment Demand Finally Cools
Lower-waged job growth, the end of “bargain” rents, and
build-to-rent single-family homes could have a big impact.
Apartment demand has soared the past year and is still flourishing. But RealPage chief economist Greg Willett points to several factors that could cool apartment performance next year.
RealPage analysts are anticipating that near-term demand for US apartments will remain well above the historical norm. However, it seems likely that the product absorption volume will ease to some degree from 2021’s high level. Several factors point in that direction.
First, most economists expect that many of the country’s near-term job additions will occur in industries where wages tend to be low or moderate. That growth pattern runs counter to what was seen over the past year or so, as recovery from Spring 2020’s mass layoffs registered more quickly in high-paying industry segments like professional services and the tech sector.
The addition of lower-paying jobs doesn’t fuel new household formation to the degree seen when expansion is led by the creation of jobs that pay well.
Second, with bargain rents now mostly in the rearview mirror in gateway metros, the demand comeback in these areas could slow. The youngest renters have played an especially big role in apartment leasing activity in gateway metros during 2021, with reduced prices spurring demand from households who previously couldn’t afford living in these locations unless they teamed up into multiple roommate households.
At this point, rents are roughly at or meaningfully above pre-pandemic prices everywhere except the San Francisco Bay Area.
Third, build-to-rent single-family homes could drain off some demand from apartments in the Sun Belt. While build-to-rent single-family home subdivisions form only a very small portion of the total rental stock now, quite a few of these communities are under construction now, mostly in Sun Belt locations where exurban land prices are low enough to make this product work financially.
Orange County
Orange County multifamily had 15 Closed Sales Last Week. This is identical to the prior week's number of closed sales and is considered an average week of closed sales for Orange County. Closed Sales - Average Days on Market remained strong at just 28 days.
The Orange County SALE OF THE WEEK was two 4 plex’s located on Claudina St. in Anaheim. Located near Disneyland. These two 4 plex’s were owned by the same owner but located on opposite sides of the street. Both sold for approx. $100,000 under the initial asking price and were on the market for 7 days. All the units were 2 bedroom 1 bath. The rents were considerably under market. There was approx. 50-65% upside in the existing rents. The exterior of both properties looks a little rough based on the photos but they are located in a strong rental area of Anaheim.
Orange County multifamily listing inventory had 12 New Listings Last Week. This is after there were 21 new listings in the prior week. The Total Number of Active Listings was down from the prior week to 128 total listings but still maintained the average number of listings for the past few weeks/months. Were not seeing a drop in listing inventory typical for this time of the year.
Live MLS and Sale of the Week Link expires in 30 days after published View Live MLS Data View PDF Version SALE OF THE WEEK
Long Beach
Long Beach multifamily had 10 Closed Sales Last Week. The is up just slightly from the prior week when there were 9 closed sales and is average for the weekly number of Long Beach sales. The Closed Sales - Average Days on Market was just 22 days. Another week of strong demand and quick turnaround times from listing of a property to an accepted offer. Half (5) of the closed sales were Transactions Sold At or Above Asking Price.
The Long Beach SALE OF THE WEEK was a 9 unit building located on Bennett Ave. The property was listed at $2,500,000 and sold for $2,580,650 in 4 days. The property is composed of one 2 bedroom 1 bath unit and eight 1 bedroom 1 bath units. The property was built in 1947 and is located only a few blocks from the beach. The property included 4 enclosed garages. The property recently had $50,000 of improvements. The exterior improvements included a new roof, wood trim, replaced eaves, paint, and windows. The interior improvements included a recently renovated unit with new floors, paint, and bathroom upgrades. The property sold at $551 per sq. ft. the average price per sq. ft. in Long Beach is $494. But this property was located in the Belmont Shore area of Long Beach which typically has a higher price per sq. ft.
Long Beach listing inventory had 11 New Listings Last Week. This is an average number of weekly new listings for Long Beach. The Total Number of Active Listings was up slightly from the prior week of 85 total listings to 88 Total Number of Active Listings.
Live MLS and Sale of the Week Link expires in 30 days after published View Live MLS Data View PDF Version SALE OF THE WEEK
Los Angeles County
Los Angeles County multifamily had a down week for Closed Sales Last Week with just 65 closed sales. That’s down from the prior week when there were 88 closed sales. The typical week of closed sales for Los Angeles County averages around 85-95 closed sales. The Closed Sales - Average Days on Market remained strong at just 30 days.
This week’s Los Angeles County SALE OF THE WEEK is a 10 unit building on Barry Ave. in Los Angeles. The property was listed at $3,150,000 and sold for $3,200,000 in 7 days. The units consisted of two single/bachelor units with 1 bath, six 1 bedroom 1 bath units, and two 2 bedroom 1 bath units. Of the 9 units, there was one non-conforming unit. There was approx. 15% upside in the current rents. The property sold for $455 per sq. ft. The Los Angeles County average price per sq. ft. is $513. The cap rate was 3.94% and the gross rent multiplier was 15.96.
Los Angeles County had plenty of new inventory with 136 New Listings Last Week. The Total Number of Active Listings crept lower at 1,714 listings and is almost below 1,700 listings after being above 1,800 listings earlier this year.
Live MLS and Sale of the Week Link expires in 30 days after published View Live MLS Data View PDF Version Sale of the Week
San Diego County
Last week San Diego County multifamily had a repeat of the prior week with 16 Closed Sales Last Week. Closed Sales - Average Days on Market remained tight at just 21 days. Just 5 of the 16 Closed Sales Last Week were Transactions That Sold At or Above Asking Price. This stat is typically about 50% of the weekly closed sales. There were 2 VA financed transactions out of the 13 Financed Transactions Last Week.
The San Diego County SALE OF THE WEEK was a duplex located on Brighton Ct. in the Mission Beach area of San Diego, with the ocean right across the street from the property. The property was listed at $1,700,00 and sold for $1,700,000 the same day it hit the market. Built in 1937. Both units were small approx. 881 sq. ft. 2 bedroom 1 bath units. There was some deferred maintenance on the exterior woodwork and deck. The units had been previously used for vacation rentals but were recently converted to long-term rentals.
San Diego County multifamily listing inventory had 17 New Listings Last Week. That’s on the bottom end of the average range of weekly new listings for San Diego County. The Total Number of Active Listings dropped to 166 listings. San Diego County’s listing inventory has been dropping steadily for the last several months and is now at the lowest number of listings this year. Months of Inventory remained at 12 months.
Live MLS and Sale of the Week Link expires in 30 days after published View Live MLS Data View PDF Version Sale of the Week
Riverside County
Riverside County multifamily had 9 Closed Sales Last Week. This is another strong week of closed sales for Riverside County. Riverside County has seen weekly sales increase for the last 34 weeks after being at a low point of 4-5 weekly closed sales prior to that. The Closed Sales - Average Days on Market was 62 days. This is an unusually high number of Average Days on Market. Riverside County is typically around 30-45 days.
Riverside County had 8 New Listings Last Week. This brings the Total Number of Active Listings to 88 listings. Both stats are about average for Riverside County.
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 had 15 Closed Sales Last Week. This is a good, strong week of sales for San Bernardino County. This indicates that the Inland Empire is still a strongly desired area for multifamily investment as rents are anticipated to continue increasing at a higher percentage than any other Southern California area. The Closed Sales - Average Days on Market was 33 days. There were 10 of the 15 Closed Sales Last Week that were Transactions Sold At or Above Asking Price. Of the 15 closed sales, there were 3 sales that were financed using FHA financing.
San Bernardino County had 10 New Listings Last Week. But the Total Number of Active Listings still dropped to 125 total listings. The Active Listings, Dollar Volume hit just above $223,000,000. The lower amount of inventory but a higher Active Listings, Dollar Volume means prices are still increasing due to strong investor demand.
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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