WHEN HOUSING AFFORDABILITY IS LOW – APARTMENTS ARE STRONG

June 16, 2014 on 11:48 am | In Buyers, Charts + Statistics, Curious, Economy, Fascinating Information, Investment Opportunities, Market Snapshot, Of Local Importance, Trends, Uncategorized | 1 Comment

from Jodi Summers

Housing affordability is why you can never go wrong with multifamily properties in Los Angeles – only 23% of homes for sale are affordable to the middle class.

And our affordability is rather peachy compared to our sister city, San Francisco. Trulia notes that only 14% of homes for sale in San Francisco are affordable to the middle class, -even though median household income is higher in San Francisco than almost anywhere else in the country.

Notice that 7 of the 10 least affordable markets are in California. We are rounded out by New York, neighboring Fairfield County, CT, and Honolulu. As you might expect, in our coastal markets – Los Angeles, Orange County, Ventura County, and San Diego – less than one-third of homes are within reach of the middle class. But, everyone has to live somewhere – it might as well be in one of your buildings.

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http://www.trulia.com/trends/2014/05/middle-class-may-2014/

http://www.socalmultiunitrealestateblog.com/?p=2682

SOCAL MULTIFAMILY REAL ESTATE SNAPSHOT JUNE 2014 – DOWNTOWN RENTALS ROCK

May 28, 2014 on 10:47 pm | In Charts + Statistics, Experts Say, Fascinating Information, Green, Investment Opportunities, Market Snapshot, New Developments, Of Local Importance, Rents, Trends, Uncategorized, WOW | 7 Comments

by Jodi Summers

Young people are interested in a different kind of lifestyle than earlier generations, thus

Americans are experiencing an urban renaissance of unanticipated proportions. Realizing that now is the time for experience, college graduates are moving to cities. Now, multifamily properties account for 40% of all new construction. It’s time for you to get in the game.

Recently released census data shows that in 2014 metropolitan areas across the country grew at a faster rate than the rest of the country, with cities like Austin, Texas and Seattle, Washington growing quickly.

In Los Angeles, according to Loopnet, multifamily property sales prices have risen +1.6% in the first quarter to a median price of $177,256.80 per unit. This is a +15.8% rise from 1Q 2013.

“There’s been a surge in urban apartment building,” says chief economist for the National Association of Homebuilders, David Crowe. “The 25- to 34-year-old age group is focused on living near their peers. They want be socially engaged and live near work. They want to reduce their automobile use. All of those things aim at high-density, urban-type living.”

Nielsen Research’s latest whitepaper on Gen Y and Millennials shares these key findings:

Those aged 18 to 27 have a median income of $24,973; meanwhile, older Millennials (28 to 36) make closer to $48,000.

  • Currently, 36% of Millennials rely on parents for financial support.
  • Millennials are the most racially/ethnically diverse generation: 19% are Hispanic, 14% are African American, and 5% are Asian.
  • 62% of Millennials prefer to live in mixed-use communities.
  • Green is still in. A whopping 60% of Millennials are willing to pay more for a product if they think it’s good for the environment.

And more curiously…

  • This generation makes up about 14.7% of Americans with assets of more than $2 million.
  • 8% of Millennials own their own business.
  • Washington D.C. is home to some of the most wealthy Millennials (those earning more than $100,000 per year), followed by San Francisco.
  • Only 21% of Millennials are married.

“Unlike their parents, who calculated their worth in terms of square feet…this generation is more interested in the amenities of the city itself: great public spaces, walkability, diverse people and activities with which they can participate,” observes Ellen Dunham-Jones, a professor of architecture and urban design at Georgia Tech.

With student-loan debt hampering their opportunities for homeownership, this demographic will continue to hold sway on the apartment industry for years to come. There are currently more than 77 million Millennials across the nation, a number just about on par with Baby Boomers.

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/demographics/understanding-gen-y-neilsen-study-takes-a-deep-demographic-dive_o.aspx?utm_source=newsletter&utm_content=jump&utm_medium=email&utm_campaign=MFEBU_051514&day=2014-05-15

http://www.socalmultiunitrealestateblog.com/?p=2683

http://time.com/72281/american-housing/

http://www.multifamilyexecutive.com/demographics/striking-a-unit-balance-for-both-baby-boomers-and-gen-y_o.aspx?dfpzone=home&utm_source=newsletter&utm_content=jump&utm_medium=email&utm_campaign=MFEBU_051514&day=2014-05-15

http://www.socalgreenrealestateblog.com/?p=3395

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

http://bhousedesain.com/wp-content/uploads/2012/04/Modern-Furnishings-to-Get-an-Urban-Living-Room-Style2.jpg

SOCAL MULTIFAMILY REAL ESTATE SNAPSHOT MAY 2014 ~ RENTS AS BIG AS A MORTGAGE

April 29, 2014 on 9:11 pm | In Buyers, Charts + Statistics, Economy, Fascinating Information, fUNNY...mONEY, Investment Opportunities, Market Snapshot, New Developments, Rents, Sellers, Trends, Uncategorized, WOW | 5 Comments

by Jodi Summers

See all those new units going up around town? They’ll soon be for rent. So, although Los Angeles apartment owners will continue to enjoy relatively tight vacancy in 2014, new construction will be applying pressure on operations in the western stretches of the county by the end of the year.

The new canyons of Marina del Rey are something to ponder as research firms like Marcus & Millichap expect top-tier rental demand to be lower than the pace of construction. New apartment development around Los Angeles will see 6,000 rentals finished – a 0.6% stock gain for the 2nd year in a row.

A plethora of high priced units are expected to lift the overall vacancy rate around town and push management to offer concessions to attract elite renters. It is anticipated that vacancy rates will rise 4.3% this year. By year-end 2014, effective rents will reach $1,726 per month, an annual rise of 1.2%.

Expect job growth in the county to accelerate bringing overall payrolls within reach of the pre-recession level for the first time in 7 years…so tenants can hypothetically afford those lofty rents…or not so much. ..

Rents in L.A. are close to a mortgage payment. Investment savvy Millennials who don’t have a half-million to spend living at the beach are going east to Culver City, Mar Vista and the historic Village Green – owning their homes, building their financial portfolios. Los Angeles zip codes like 90034, 90066, 90025, 90230, 90016 and 90046 are well-located equity-building locations.

For investors, average cap rates are near historical lows, which means we could see more inventory; but keep in mind, the current West Side buying frenzy is attributable to unproductive alternative investment vehicles rather than property fundamentals. An abundance of cash, fear of a stock market correction, and low interest rates favor the acquisition of low-yielding apartments. When interest rates move higher, the experts expect investors to rethink the current strategy and explore alternative options.

Additionally, first-time investors are drooling to get into the Silicon Beach multifamily market, and are willing to accept early returns below 5% in long-term hold plays.

Stiff competition is driving desirable buildings are going into multiple offer scenarios, driving down cap rates, leaving many investors reliant on Southern California real estate renowned rapid appreciation.

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.marcusmillichap.com/research/researchreports/reports/2014/01/06/los-angeles-apartment-research-report

http://www.socalmultiunitrealestateblog.com/?p=2678

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.

**

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 | 4 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.

**

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

http://affordablehousinginstitute.org/blogs/us/wp-content/uploads/lion_lackadaisical-300×225.jpg

http://www.potentash.com/wp-content/uploads/2012/08/sleeping-giant.jpg

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

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