SOCAL MULTIUNIT REAL ESTATE SNAPSHOT MARCH 2014 – ALL IS WELL

March 3, 2014 on 11:41 pm | In Buyers, Charts + Statistics, Experts Say, Fascinating Information, Investment Opportunities, Market Snapshot, Rents, Sellers, Trends, Uncategorized | 2 Comments

by Jodi Summers

Experts agree, the multifamily market will continue to remain suitably tight to allow landlords to continue to raise rents. Currently, for regions on the western half of Los Angeles County, vacancy is in the low-3% range, allowing operators sufficient leverage to lift rents more significantly than the pace of inflation.

Current Los Angeles market trends data indicates an increase of +16.2% to $169,156 per unit compared to last year’s prices in the City’s more desirable areas – for the properties that are available. The number of multifamily properties for sale in Silicon Beach neighborhoods like Culver City, Mar Vista, Marina Del Rey, Venice, Santa Monica and Westwood is way down, forcing prices up, yet again.

Of the 12,500 units currently beyond the groundbreaking stage, nearly 12,000 are in the western part of the county, observes Marcus and Millichap’s most recent Apartment Market Research Report.

“Some of these units will hit the market in 2014, putting additional downward pressure on effective rents,” according Luis Mejia, CoStar’s director of U.S. research, multifamily.

At the current pace of demand growth, pundits believe vacancy will rise to close to 4% next year as new supply competes with existing units.

National housing vacancy rates in the fourth quarter 2013 were 8.2% for rental housing and 2.1% for homeowner housing, according to the Department of Commerce’s Census Bureau. The rental vacancy rate of 8.2% was 0.5 percentage points lower than the rate in the fourth quarter 2012.

For more information please contact Jodi Summers and the SoCal Investment Real Estate Group @ Sotheby’s International Realty – jodi@jodisummers.com or 310.392.1211, and let us move forward together.

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http://www.costar.com/News/Article/CRE-Industry-Faces-Dramatic-Changes-in-Multifamily-Supply-Financing-Environment/157046?ref=100&iid=374&cid=383F14EEE265B182474DA2442BACBBBF

http://www.socalmultiunitrealestateblog.com/?p=2658

http://www.loopnet.com/Los%20Angeles_California_Market-Trends?Trends=AskingPricesFS,SalePricesFS,TotalAvailableForSaleFS,NumberOfListingsFS,ProfileViewsFS,TotalNumOfUnitsFS,TotalSFAvailableFS,DaysOnMarketFS,AskingRentsFL,NumberOfListingsFL,ProfileViewsFL,TotalSFAvailableFL,DaysOnMarketFL&PropertyTypes=Multifamily

SOCAL MULTIFAMILY REAL ESTATE SNAPHOT ~ DECEMBER 2013 > TOO MUCH OF A GOOD THING?

November 30, 2013 on 5:19 pm | In Charts + Statistics, Curious, Experts Say, Fascinating Information, Market Snapshot, Rents, Trends, Uncategorized | 3 Comments

by Jodi Summers

Is the party over? The apartment market has been on an exceptional run for the past four years. During the Great Recession we stumbled through a for-sale housing market in tatters, a weak recovery in the labor market that created mostly middling jobs for young workers, and benign supply growth. Combine all of the lackadaisical factors and you’ve hit the recipe for impressive strength it the apartment sector.

As they always say, all good things must come to an end. The for-sale housing market  in Los Angeles County has again become vibrant…but that’s not the main use. Over-construction is.

For example, builders have completed another 1,400 rentals in the Westside Cities over the past year, representing a 1% rise in inventory. Research from Marcus and Millichap notes that the largest project to come online in the past year is Marina Del Rey’s Shores > 12 buildings, 544 units.

During the past year, vacancy jumped to 3.2% percent. Net absorption was negative > rents have peaked for the time being. Looking forward, experts expect Westside vacancies to rise to 3.4% in 4Q 2013. Average effective rents at developments constructed since 2000 dipped 5.3% year-over-year in the third quarter to $2,769 per month.

The trend toward excessive unit construction is a national phenomenon. New completions in the top 82 markets in the country averaged just 10,623 units per quarter in 2011 and 19,585 units per quarter in 2012. Over the first three quarters of 2013 new completions averaged 27,411 units per quarter. This is the highest quarterly average since 2009.

New completions in the top 82 markets for 2013 are expected to total roughly 124,000 units. 5,400 units were added in L.A. County. These amounts  is on par with the long-term annual average of +/-120,000…but just wait,  in 2014, new completions are expected to total about 164,000 units, well above the historical long-term average. Expect 9,000 units in L.A. County in 2014.

Although demand for apartment units will remain rather robust, it is unlikely the market will be able to absorb this many units, causing vacancy to increase. This would represent a pronounced change from the past four years, when vacancy was compressing rapidly as demand far outpaced a subdued level of new completions.

For more information please contact Jodi Summers and the SoCal Investment Real Estate Group @ Sotheby’s International Realty – jodi@jodisummers.com or 310.392.1211, and let us move forward together.

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http://www.multifamilyexecutive.com/multifamily-building/new-construction-threatens-multifamilys-good-run.aspx?dfpzone=home&day=2013-11-21&utm_source=newsletter&utm_content=jump&utm_medium=email&utm_campaign=MFEBU_112813&day=2013-11-28

http://www.socalmultiunitrealestateblog.com/?p=2603

http://www.multifamilyexecutive.com/multifamily-trends/nations-strongest-markets-some-weaker-than-others.aspx?day=2013-11-14&utm_source=newsletter&utm_content=jump&utm_medium=email&utm_campaign=MFEBU_112813&day=2013-11-28

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https://www.marcusmillichap.com/services/research/webreports/LosAngeles/Apartment.aspx

SOCAL MULTIUNIT REAL ESTATE SNAPHOT ~ NOVEMBER 2013 ~ RENTERS ARE STAYING HOME

October 31, 2013 on 4:32 pm | In Charts + Statistics, Curious, Experts Say, Fascinating Information, Investment Opportunities, Market Snapshot, Rents, Trends, Uncategorized, WOW | 3 Comments

by Jodi Summers

Based upon the demographics, we should be in the midst of a huge housing boom. While rental markets are strong in many areas, on a percentage basis, young people are not flowing into the marketplace as previous generations.

“It is true that as the economy recovers, faster household formation should create demand to occupy the new units,” observes Luis Mejia, CoStar Director of U.S. Research, Multifamily. “But relatively easy apartment financing and prolonged developer optimism have created a supply wave that could adversely affect rents and vacancies — even in places where today’s economics and demographics are apparently favorable.”

Certainly that’s what’s created the stability in the Westside of Los Angeles apartment market. In the past year, the median price per unit jumped 10% to $236,100 per unit. While unit prices are up, average cap rates are down slightly, but still hovering in the high-4% range. Rising interest rates will have a pronounced affect on the Westside Cities region due to razor thin margins. Already the number of deals being done in Santa Monica and Beverly Hills has slowed significantly.

Westside sale and rental rates are also seeing an impact due to the high unemployment rates for those under 30. Experts say there are “8.2 million young adults ages 20 to 24 who can’t find full-time employment, including 4.1 million who are disconnected from both work and school and another 3.6 million who are working part time when they want to work full time.” For college graduates in this age group, the unemployment rate is double what it is for those in their 30s and 40s.

Today’s high rental rates are scaring those who are new to the market. As opposed to rising to the challenge, they are doing nothing.

Studies show there are “4 million young adults who are not engaged in any sort of activity to develop their human capital; they are not gaining education in school, nor are they learning skills or getting experience through work.”

Millennials are moving back in with mom and dad in staggering numbers. In the past, when young people first went to work, they would buy a car and start saving for a down payment for a home. For the 8.2 million who can’t find full-time employment, these choices are not an option. As a result, many of our young people will be stuck either at home or in a rental since they can’t afford a down payment on a house. If they have children it will be even more difficult to save the money for a down payment. This means the demand for rental property will be high and that fewer millennials will become property owners in their 20s or early 30s.

For more information please contact Jodi Summers and the SoCal Investment Real Estate Group @ Sotheby’s International Realty – jodi@jodisummers.com or 310.392.1211, and let us move forward together.

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http://www.inman.com/2013/10/24/cant-find-work-or-save-for-a-down-payment-are-millennials-becoming-real-estates-lost-generation/#sthash.eNuAcUZU.dpuf

http://www.costar.com/News/Article/Renter-Demand-Holding-Fast-So-Far-As-Apartment-Supply-Wave-Begins-to-Break/151551

http://www.socalmultiunitrealestateblog.com/?p=2574

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SOCAL MULTIUNIT REAL ESTATE SNAPHOT ~ OCTOBER 2013 ~ MULTIFAMILY BUYERS ARE HUNGRY

September 30, 2013 on 2:03 pm | In Buyers, Charts + Statistics, Experts Say, Market Snapshot, Sellers, Trends, Uncategorized | 4 Comments

by Jodi Summers

We’re going to give it to you straight – Los Angeles multifamily properties are valuable. Conditions are tight. Prices are up. Now is a fine time to sell, or exchange an apartment into another, less hands-on property investment.

Looking at Los Angeles County, if we compare August 2012 to August 2013, according to Clarus Market Metrics, the median price of for sale properties is up 14% and the median price of sold properties is up 85%.

A major factor driving up volume is inventory – there’s not of it. Contrasting Aug. 2012 and Aug. 2013 we find that the choices of for sale properties is down -5% and the number of sold properties is up 10%. The statistics show, buyers are taking what they kind find and paying a premium for it. Savvy real estate players have been making off market deals.

County-wide, asking prices for Multifamily properties are 5.5% higher at $174,481 per unit compared to the current median price of $161,643 per unit for Multifamily properties in Los Angeles, CA.

For more information please contact Jodi Summers and the SoCal Investment Real Estate Group @ Sotheby’s International Realty – jodi@jodisummers.com or 310.392.1211, and let us move forward together.

**

http://www.loopnet.com/Los-Angeles_California_Market-Trends?Trends=AskingPricesFS,SalePricesFS,TotalAvailableForSaleFS,TotalNumOfUnitsFS,TotalSFAvailableFS,DaysOnMarketFS,AskingRentsFL,NumberOfListingsFL,TotalSFAvailableFL,DaysOnMarketFL&PropertyTypes=Multifamily

http://www.socalmultiunitrealestateblog.com/?p=2542

https://www.terradatum.com/cmm/CLAW;jsessionid=CD3E8E165B6F78BA374B86E52BE587D6

SOCAL MULTIUNIT REAL ESTATE SNAPHOT – SEPTEMBER 2013 – LOOKING FOR BALANCE

August 31, 2013 on 12:08 pm | In Buyers, Economy, Experts Say, Market Snapshot, Rents, Sellers, Trends, Uncategorized | 2 Comments

by Jodi Summers

Everyone wants real estate by the beach. In the coastal Los Angeles apartment building market, investor enthusiasm remains high, with more buyers active in the market than sellers. The results? Assets near the coast can command first-year returns in the low-4% range, with mostly cash-heavy buyers in the pool. Further inland, where first-year returns strengthen, closer to 6%. Thanks to Quantitative Easing, the spread between cap rates and interest rates remains workable for most investors, even first-time buyers.

Everyone is getting into the pictures. From 2Q 2012-2Q 2013, deal flow in the Westside Cities ticked up 3% compared with the previous year-long period, according to the Marcus & Millichap Third Quarter Apartment Research Report. On the Westside, the median price jumped 10% during the past year to $236,100 per unit. Prices are expected to rise close to $300,000 per unit by year’s end.

Have you noticed that there are a lot more apartments for lease lately? Builders completed 4,200 units during the past year, with an additional 12,600 apartment under construction including  the soon-to-be-completed 544-unit Shores apartments in Marina del Rey.

The Van Nuys/Northeast San Fernando Valley, Santa Monica/Marina del Rey, Downtown Los Angeles and Tri-Cities submarkets are expected to absorb excessive  inventory growth in the coming months,. Recent gains in home prices and interest rates are expected to mitigate the renter to buyer transition in the coming months…and this is on top of a year of excessive instruction.

Between 2Q 2012-2Q 2013  builders finished 940 rentals in the Westside Cities, with more than more than 640 units in the Santa Monica/Marina del Rey submarket. This increased local rental stock by 0.7%.  Despite the increase in volume, vacancy rates in the region declined to 2.4%..

In 2Q 2013, rents at professionally managed apartments were $2,390 per month, up an impressive 7.9% from the same period last year – and raising cap rates for owners.  Palms/Mar Vista recorded a year-over-year rent increase 6.7% to $1,817 per month.

On the Westside, Brentwood/Westwood/Beverly Hills was the most impressive of all, rising  10.4% in the past year.

Upward pressure on cap rates is percolating, which may finally signal to owners with plans to dissolve their portfolios within the next three years to put properties on the market.

Pundits predict that rising interest rates fueled by speculation that the Fed will begin to evaporate the third round of quantitative easing by year end. This should even out the  imbalance between the number of buyers, while  is forcing some leveraged buyers to the sidelines or inland in search of higher yields.

For more information please contact Jodi Summers and the SoCal Investment Real Estate Group @ Sotheby’s International Realty – jodi@jodisummers.com or 310.392.1211, and let us move forward together.

**

http://www.marcusmillichap.com/Services/Research/

http://www.socalmultiunitrealestateblog.com/?p=2510

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SOCAL MULTIUNIT REAL ESTATE SNAPHOT – AUGUST 2013 ~ MORE HOUSING NEEDED

July 31, 2013 on 5:33 pm | In Buyers, Charts + Statistics, Experts Say, Lenders + Vendors, Market Snapshot, Sellers, Trends, Uncategorized | 1 Comment

by Jodi Summers

Multifamily may have its lulls, but truth is more people want to live in Los Angeles than the city can house. Apartments in desirable locations and along mass transit lines are appealing investments. Did you notice that relatively few multifamily properties when into foreclosure during to downtown?

The current Allen Matkins / UCLA Anderson Forecast survey of multi-family housing developers focuses on three California markets – Los Angeles, San Francisco, and Silicon Valley. Looking ahead through 2016, the panel offered an optimistic view about the prospects for returns on multi-family housing. The report concludes that the market outlook is sufficiently bright for 55% of selected developers who will initiate new multifamily projects in the next year.

In Downtown Los Angeles, apartment vacancy rates have fallen to about 2% spurring a host of new apartment projects including the inspiring Grand Avenue mixed use development. Favorable fundamentals and a Los Angeles City plan to facilitate permitting of multi-family projects near the newly opened light rail lines marks the beginning of a building boom in L.A. County.

Upstate, the booming San Francisco market has seen rents increase at double-digit rates and vacancies fall to approximately 3%. This has given rise to a number of new building projects including the massive Park Merced, Treasure Island, Mission Rock, Pier 70 and Hunter’s Point developments as well as a flurry of new apartment building in The Mid-Market District.

As the Los Angeles multifamily market, as long as demand outpaces supply, it is always a good time to invest. Sooner rather than later will be easier on your bank accounts.

“Debt costs for apartment firms have been rising. In addition to the 90 basis point increase in interest rates from the April survey, spreads over Treasuries have also gone up, likely dampening transactions somewhat. Rates are still low by historical standards, however, and at current levels should not put too big a crimp in apartment activity going forward, “observed Mark Obrinsky, Senior Vice President for Research and Chief Economist National Multi Housing Council’s Quarterly Survey of Apartment Market Conditions. “Underlying demand trends remain strong, and we are approaching the cusp of a meaningful increase in supply that will hopefully be enough to meet the current need for apartment homes.”

As job formation continues in the coming years, so will household formation and the demand for multi-family housing is expected to remain strong Expect a balance between new additions to multi-family housing and the absorption of those additions by 2016.

For more information please contact Jodi Summers and the SoCal Investment Real Estate Group @ Sotheby’s International Realty – jodi@jodisummers.com or 310.392.1211, and let us move forward together.

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http://www.allenmatkins.com/Publications/About/New-About-Allen-Matkins-UCLA-Forecast.aspx

http://www.allenmatkins.com/Publications/Videos-and-Presentations/Videos/2013/07/10_07_2013-Summer-Anderson-Multifamily-Outlook.aspx

http://www.youtube.com/watch?feature=player_embedded&v=5GmaSOCerkg

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http://www.nmhc.org/PressRelease.cfm?ItemNumber=61292&NavID=44

http://www.nmhc.org/goto/61291

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