THE SOCAL MULTIUNIT REAL ESTATE SNAPSHOT ~ JANUARY 2013 ~ IMPROVING HOUSING
December 31, 2012 on 8:48 pm | In Charts + Statistics, Economy, Experts Say, Market Snapshot, Rents, Sellers, Trends, Uncategorized | 5 Commentsby Jodi Summers
Wow! It’s 2013! We made it. And during the tumultuous times of the past few years, multifamily has had an excellent run. Throughout the recession, multiunits were the beacon of hope in an otherwise depressing real estate market. Now apartment properties are falling back into the pack of real estate options.
Throughout the recession, apartment REITs was the darling of commercial real estate investment. Multifamily has led the industry’s recovery since it hit bottom in 2009. The sector was one of the very few that has been able to secure financing for new construction amid strict lending requirements.
It was multiunits gone wild for a couple of years, and many wise buyers and sellers got their jollies during the peak, which may be why there has been a 12.6% drop in inventory in the past year. The drop in supply and the shorter time on market has caused prices to go up, and may continue to do so. Sellers, are you listening? We have buyers looking for properties like yours.
Multifamily are a strong addition to your portfolio. Over the past year median sale prices in Los Angeles have risen 2.1% to $137,203 per unit, according to Loopnet. The current median sale price is down by 9.9% from the highest median sale price over the past three years, which was $152,354 set in October 2009. In comparison, the current price is 3.7% higher than the April 2012 figure, which was the three-year low.
The National Association of Realtor’s latest Commercial Real Estate Outlook concludes that multifamily housing is projected to see vacancy rates decline from 4.0% in the fourth quarter to 3.9% in the fourth quarter of 2013. They say, “Vacancy rates below 5% are considered a landlord’s market with demand justifying higher rents.”
Areas with the lowest multifamily vacancy rates currently are Portland, Ore., at 2.1%; New York City, 2.2%; and Minneapolis, 2.3%.The Los Angeles vacancy rate in 3Q 2012 was 4.6% according to CBRE.
Average apartment rent were said to have increased 4.1% in 2012 and will grow another 4.6% next year. Multifamily net absorption is likely to be 219,700 units this year and 234,600 in 2013. 
Results from the Urban Land Institute’s Emerging Trends In Real Estate poll or investors found that they consider the best housing markets to be in areas with better commercial real estate options – because a housing sector recovery generates more jobs, and demand for vacant commercial real estate. Demand and interest in apartments in “American infill” locations like our local Koreatown and Silver Lake remain attractive, leading to a boom in apartment development. Leading the multifamily move is the echo boomer generation, which is delaying plans of home ownership.
We’re here to help you with your commercial and investment property needs. 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://blogs.wsj.com/developments/2012/12/12/investors-assess-apartments-after-the-love-is-gone/
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http://www.loopnet.com/Los-Angeles_California_Market-Trends
http://trends.truliablog.com/2012/12/trulia-price-rent-monitors-nov-2012/
SOCAL MULTIUNIT REAL ESTATE SNAPSHOT – DECEMBER 2012 – THE GOOD TIMES CONTINUE
December 1, 2012 on 12:25 am | In Charts + Statistics, Economy, For Your Purchasing Pleasure, Investment Opportunities, Market Snapshot, Rents, Uncategorized | 3 Commentsby Jodi Summers
If you’ve owned your home for a while, and have a relatively low mortgage, it is surprising when you realize how much more tenants pay in rent. In Los Angeles, residents continue to lease more apartments at higher rents, while investors are pursuing multifamily acquisitions in increasing numbers. The CoStar Group calculates that multifamily sales are the only property type to report year-over-year gains in sales volume. The total dollar value of multifamily properties sold nationally in the first nine months of 2012 is up 20% over 2011 – $53.41 billion vs. $44.62 billion.
On the surface, the robust demand the apartment industry has enjoyed appears somewhat inconsistent with our economy. But, the experts note, that on closer evaluation, the seeming disparity isn’t so clear after all. Mild job growth and current demographic trends support the strong performance of multifamily, while issued permits, starts, and construction trends all reflect a sizable upward trend.
Forecasts for the multifamily market and the demand for rental housing will remain solid for the next couple of years, deduces the Freddie Mac Multifamily Research Group and the National Multi Housing Council (NMHC). This investment area continues to benefit from recent declines in homeownership related to economic stress and high foreclosures in the single-family housing market. Freddie Mac is forecasting that the homeownership rate will drop another 1 to 2 percentage points if the current slow recovery continues, and anticipates the formation of an additional 1.7 million new multifamily renter households between now and 2012.
“The research supports the optimism that currently pervades the multifamily market,” observes David Brickman, senior vice president of Freddie Mac Multifamily. “It confirms that multifamily is a bright spot in the real estate market and the economy… and it will likely continue to shine for quite some time.”
With lots of new supply coming on line over the next two years, investors should take a close look at a metro’s employment momentum; for example, unemployment in Los Angeles has dropped from 13.9% in September 2010 to 10.2% in 2012. Additionally, patrons should look at submarket vacancy rates for existing product, Los Angeles vacancy rate is under 4%. Single-family sector fundamentals now exhibit consistent improvement, throwing housing affordability relative to new development into the analytical mix.
Apartment markets continued to improve across all areas of the country for the seventh quarter in a row, in some markets where new supply has been introduced or rising rents have bumped up against an affordability ceiling, mild leasing incentives have crept back into the marketplace.
Multifamily properties continue as a perennial favorite among investors who favor stable cash flows and desire a lower-risk profile and a more-liquid capital market relative to other product types. Core investors may still prefer the safety and cash flow of top-tier communities in gateway markets, but revenue gains will slow in metros like Los Angeles where Class A apartments post sub-5% vacancy rates and several years of steepening rents now outpace wage gains. Increasingly, investors seeking higher yields have gravitated to secondary and even tertiary markets.
On balance, increased liquidity will aid in financing new mortgages, restructuring loans, and driving capital into real estate, now viewed as a compelling alternative to the low-yielding bond and volatile equity markets.
“Even after nearly three years of recovery, apartment markets around the country remain strong as more report tightening conditions than not,” offers NMHC chief economist Mark Obrinsky. “The dynamic that began in 2010 remains in place: the increase in prospective apartment residents continues to outpace the pickup in new apartments completed. While development activity has picked up considerably since the trough, financing for both acquisition and construction remains constrained, flowing mainly to the best properties in the top markets.”
We’re here to help you with your commercial and investment property needs. 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.socalmultiunitrealestateblog.com/?p=2219
http://www.calmis.ca.gov/file/lfmonth/la$pds.pdf
http://www.deptofnumbers.com/unemployment/california/los-angeles/
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THE SOCAL MULTIUNIT REAL ESTATE BLOG ~ NOVEMBER 2012 < HOW WILL NO MORE SMOKING AFFECT LEASE RATES IN SANTA MONICA?
October 31, 2012 on 3:52 pm | In Curious, Fascinating Information, Market Snapshot, New Developments, Trends, Uncategorized, WOW | 2 Commentsby Jodi Summers
Santa Monica has often been nicknamed the “Republic of Santa Monica” for the City’s rather unique stance on various social positions. Santa Monica’s latest set of rules may or may not be unconstitutional, but it will no doubt impact multiunit properties throughout Los Angeles. The City of Santa Monica has declared that all new occupancies after Nov. 22, 2012 are non-smoking. No ands, ifs, and certainly no butts.
Will this affect the desirability of one of the world’s best beach cities? We will need to watch. In September and October 2012 in Santa Monica, according to the MLS, 98 properties were leased in Santa Monica. The median lease rate was $4,000 or $3.31 per sq ft per month. The lowest lease rates were $1,500 for several studios and one bedrooms east of Lincoln Blvd., and the high being $14,100 for an Ocean Ave. penthouse. Properties averaged 38 days on the market.
Existing Santa Monica law already bans smoking in residential outdoor and indoor common areas, including balconies and patios and any area within 25 feet of any door, window or vent. The new smoking rules that affect all multi-unit housing in the City
include the following:
- All new occupancies after Nov. 22, 2012 are non-smoking: Anyone moving into an apartment or condo in Santa Monica after November 22 can’t smoke in the unit.
- Owners and condo associations are expected to conduct smoking surveys by January 21, 2013. Prior
to this date, all landlords and condo homeowners’ associations must conduct a survey of current occupants, who must then designate their units either “smoking” or “non-smoking.” Current occupants are grandfathered in. Existing occupants can continue to smoke inside their units if they designate the units as “smoking.”
- Results must be distributed. Once the survey is done, landlords and HOAs are expected to give out the updated list of all units’ smoking status to all occupants. In the future it must be kept updated, and given to all prospective renters and buyers along with a copy of the attached information sheet, from www.smconsumer.org.
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NEW SMOKING LAW AFFECTS ALL SANTA MONICA APARTMENTS AND CONDOS
Important Info For Landlords, Tenants, And Condominium Owners
Santa Monica has passed a law with new smoking rules that affect all multi-unit housing:
- All new occupancies after 11/22/12 are non-smoking: Starting November 22, 2012, all newly occupied units in multi-unit residential properties in Santa Monica are declared non-smoking. This includes all apartments and condos. So, anyone moving into an apartment or condo after November 22 can’t smoke in the unit.
- Owners must start smoking survey by 1/21/13: Before January 21, 2013, all landlords and condo homeowners’ associations are required to begin a survey of current occupants, who must then designate their units either “smoking” or “non-smoking.” For details about this process, go to smconsumer.org.
- Current occupants grandfathered: Existing occupants can continue to smoke inside their units if 
they designate the units as “smoking.”
- Results distributed: Once the survey is done, landlords and HOAs must give out the updated list of all units’ smoking status to all occupants. In the future it must be kept updated, and given to all prospective renters and buyers along with a copy of this information sheet. (Also available at smconsumer.org)
- Common areas too: Existing Santa Monica law already bans smoking in residential outdoor and indoor common areas, including balconies and patios and any area within 25 feet of any door, window or vent.
Q: Are there exceptions to the law? If a property is already 100% smoke-free, the designation process is not required. The law also does not apply to temporary special needs housing for people with disabling conditions.
Q: How is the law enforced? Most compliance is achieved through communication. If that fails, and a person persists in smoking inside a non-smoking unit after getting a written notice, the person may be taken to small claims court and is liable to pay damages starting at $100. Any person can enforce the law by giving notice and eventually going to court.
Q: Are property owners required to enforce the law? No. They are only required to conduct the survey and keep updated lists available. They are not required to enforce violations of the no-smoking rules.
Q: What happens if a property owner refuses to conduct the initial survey and give out the required information? The owner can be prosecuted for violating the Municipal Code.
Q: Can a tenant be evicted for violating this law? No. But a tenant can still be evicted if the lease 
prohibits smoking.
Q: What about medical marijuana? If a unit is non-smoking, then medical marijuana can’t be smoked inside. If a doctor specifically requests that a disabled occupant may smoke marijuana indoors, and the occupant can’t take marijuana in non-smoked form, then the smoking might be permissible under the “reasonable accommodation” standard for disabilities. For more information call the City Attorney’s Office, 310-458-8336.
Q: Where can I get help with quitting? Go to nobutts.org, or call 1-800-NO-BUTTS.
Q: Where can I get more information? Go to smconsumer.org, or call the City Attorney’s Office, 310-458-8336.
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We’re here to help you with your property needs. 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://pro.themls.com//membersonly/THEMLSPRO/select.cfm?frame=lse&search_kind=listing
http://www.smgov.net/uploadedFiles/Departments/CPU/S.M.%20smoking%20law%20102412.pdf
http://www.socalmultiunitrealestateblog.com/?p=2173
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MILLENNIALS AND COLLEGE GRADS WILL WORK HARD
October 20, 2012 on 8:47 am | In Charts + Statistics, Curious, Fascinating Information, Market Snapshot, Trends, Uncategorized, WOW | 3 Commentsby Jodi Summers
How has the Great Recession limited the hopes and dreams of young adults? Educated young adults are not about seeing the world or joining the Peace Corps, they’re about financial security. According to a recent report from the Heldrich Center for Workforce Development at Rutgers University, today’s college students and recent graduates are seeking financial security above all other major life goals.
The Center surveyed juniors, seniors and graduate students at four-year colleges — as well as working college graduates of earlier generations — about life, career and goals.
The results show today’s generation of young people think differently. Fresh out of school, you’d think they’d be more idealistic, pursuing their ideals and passions rather than money…Ironically 91% of college students and 95% of millennials (college graduates between ages of 21 and 32) said that being financially secure was either essential or very important to them.
Having come of age during the Great Recession, young people have been heavily impacted by the terrible economy they are graduating into…has the recession limited them to dreaming big dreams?
When asked to dream, smaller shares of young people felt equally driven about being a leader in their community or having a job with an impact on causes they cared about. < There’s the idealism…keep America dreaming…
This is a good generation of Americans…with values akin to the 1950s. They would like to achieve and keep America growing. Capitalists, they say wealth is a key life goal…at least they’d like to get rid of their school loans.
Did you know Millennials, after all, have unusually high volunteering rates compared to earlier generations of young people?
This is the first time the Heldrich Center asked these specific questions, so it is unclear as to what extent these generational differences are due to aging, current economic conditions or something culturally specific to each age group. But, if you take the results to heart, you’ll realize that the country will be in good hands with this motivated and capable generation.
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http://economix.blogs.nytimes.com/2012/05/24/young-educated-and-seeking-financial-security/
http://www.socalofficerealestateblog.com/?p=2187
http://www.santamonicapropertyblog.com/?p=4509
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http://www.socalmultiunitrealestateblog.com/?p=2052
MULTIUNIT REAL ESTATE SNAPSHOT ~ OCTOBER 2012 < YOU CAN MAKE MONEY
October 1, 2012 on 10:48 am | In Charts + Statistics, Experts Say, fUNNY...mONEY, Market Snapshot, New Developments, Sellers, Trends, Uncategorized, WOW | 2 Commentsby Jodi Summers
Sellers, you will love the results. 
There is money to be made in the multifamily marketplace in the near future. If you have been contemplating selling your apartment property, let us save you several night of restless contemplation. For new-to-the-market, well-priced apartment properties, it’s easy to get satisfying sales results.
You’ve been hearing great praise for the Los Angeles area apartment market for some time. But with a tremendous number of new multiunit properties in the pipeline, cap rates will come down – particularly on older properties. That’s why now is the time to move.
Here are the facts on Los Angeles County multifamily properties,comparing the recession autumn of Sept. 2010 with our more optimistic Sept. 2012: 
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The number of Under Contract properties is up 59%
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The median sold price is up 61%
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The median price of for sale properties is up 19%
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The average months supply of inventory is down -72%
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The number of For Sale properties is down -46%
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The number of New properties is down -23%
>>>> If you’d like to know more about a specific neighborhood, please let us know. <<<<
Also signs are go. Now is a particularly good time to be proactive, as there are many multiunit properties in the construction pipeline. In the UCLA Anderson Forecast national report, senior economist David Shulman expressed optimism about 2013 and 2014, buoyed by, “the lone bright spot in the economy” — the long-awaited rebound in housing construction.
“Led by multi-family construction,” he writes, “housing starts are ramping up, from 612,000 units in 2011 to 763,000 units this year and just under 1 million units in 2013. By 2014, we anticipate that housing starts will be in excess of 1.3 million units and the growth in housing will account for about a full percentage point in GDP growth by 2014.” 
The National Association of Home Builders notes that starts in buildings with five or more apartments for June came in at 213,000 (at a seasonally adjusted annual rate). On a year-over-year basis, five-plus starts were up 29%, reflecting the generally upward trend that has prevailed in this segment of the construction industry since the end of 2010.
Economist Shulman reasons that the strength in housing is fortified by gradually rising home prices, record low mortgage rates, improved household formations and modest employment growth. 
And as we currently stand, fresh into 4Q 2012, prices are up, inventory is down. If you’re thinking of selling < now is the season.
We’re here to help you with your commercial and investment property needs. 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://uclaforecast.com/contents/archive/2012/media_92012_1.asp
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https://www.terradatum.com/cmm/claw
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SOCAL MULTIFAMILY REAL ESTATE SNAPSHOT ~ SEPTEMBER 2012 > GO! TEAM!
September 1, 2012 on 11:52 am | In Charts + Statistics, Economy, Experts Say, Investment Opportunities, Market Snapshot, Rents, Sellers, Trends, Uncategorized | 2 CommentsBy Jodi Summers
Rah! Rah! Here’s a fine thing about living in a big city: Los Angeles’ vast array of investment opportunities suits buyers with any investment strategy. Our chic Class A properties draw keen interest from institutional capital, while individual investors have an opportunity to make successful value-add plays in budding neighborhoods adjacent to downtown. It’s been a juicy market.
“Cap rates in closed transactions generally start in the high-4% range for best-in-class deals, and reach up to high-6% for assets with deferred maintenance or operational issues,” observes the Apartment Research Report – Third Quarter 2012 from Marcus & Millichap Research Services.
Everyone wants to own units in L.A. Buyers continue to outnumber sellers. Researchers conclude that the median price of multiunit properties sold is Los Angeles County is up 2% from the preceding 12-month span = $137,500 per unit. 
According to the MLS, in August 2012, the median sold price for multiunit properties in Los Angeles County had jumped 17% when compared to August 2010. Pundits predict median price will maintain an upward trajectory.
Makes sense. Los Angeles is rising like a Phoenix out of our economic doldrums. Countywide, professional and business services added nearly 12,300 new hires in the first half of 2012. At the end of July 2012, Los Angeles County unemployment was at 11.2%, down from 12.5% a year ago. Our future is looking much brighter, don’t you think?
The experts believe our healthy private-sector job growth and a wavering single-family housing market will sustain the Los Angeles apartment sector in 2012.
With countywide vacancy rates again lounging @ 3.4%, operators are charting more significant rent growth. During the most recent 12 months, asking rents rose 2.2% to $1,405 per month. Effective rents averaged $1,358 per month.
The brainiacs calculating the 3Q Apartment Research Report believe asking rents will rise 3.2% to $1,429 per month, while effective rents advance 4.4% to $1,392 per month. This is a big jump over last year, when asking rents grew 0.6% and effective rents bumped up 0.8%.
Rents will climb because the number of households has grown 1.3% in the last year. Combined households have again separated, marking one of the highest rates of growth since the dot-com boom. Many of these new households reside in multifamily properties for the time being.
Nationally, as rents continue to rise and home prices continue to decline, the advantages of renting over owning is becoming ever narrower in many major metropolitan areas. Not so in Los Angeles. According to the latest data from Zillow, nearly 75% of the 200 metro areas it surveyed would see homeowners reach a “breakeven point” in three years or less. But not us. L.A. made the list of the Top 10 Cities Where It Makes More Financial Sense to Rent: 
In the second quarter, the median household income in Los Angeles was approximately at $58,600 per year < $21,000 short of the minimum qualifying income to purchase a median-priced home, currently costing $338,500. (A 5% drop over the past year.)
The typical mortgage payment for a median-priced home in Los Angeles is $12 per month more than the average Class A rent. The caveat is that a majority of the population is lives in the lower-tier rental market and does not meet the minimum income requirement to become a homeowner in Los Angeles. Analysts conclude there is little possibility of vast amounts of renters trading up to enter the housing market.
Currently, multifamily housing prices are close to peak levels, owners who have recorded steady cash flows for several years should think about selling in order to put accumulated equity into higher-quality apartments. Owners are liking this idea. In the past year, 1031-exchange deals accounted for 10% of all sales.
Beach communities, as well as prime neighborhoods can offer first-year returns anywhere in the high-4 to low-5% range. Value-add plays in less-desired parts of the county may yield in the high-6 to low-7% area, depending on property condition.
We’re here to help you with your real estate needs. 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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https://www.terradatum.com/cmm/claw
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