Jodi Summers = Multiunit Real Estate

SOCAL MULTIUNIT REAL ESTATE SNAPSHOT ~ JUNE 2013 ~ GOOD FOR NOW

June 1, 2013 on 7:44 am | In Buyers, Charts + Statistics, Curious, Experts Say, Investment Opportunities, Market Snapshot, Rents, Sellers, Trends, Uncategorized | 4 Comments

by Jodi Summers

Life is good if you’re a landlord, not so good if you’re a tenant. Since the Great Recession, owning a home has become more affordable, renting less so. From 2008 to 2011, renters’ housing costs increased almost 6%, while their income fell 3.2%, concludes a recent report from the Center for Housing Policy. More than 26% of working renters spent at least half their income on housing in 2011, up from about 23% in 2008.

Los Angeles market trends indicate an increase of +1.3% in the median asking price per unit for Multifamily properties compared to the prior 3 months, with an increase of +7.7% compared to last year’s prices, notes the “Apartment Market Research Report” from Marcus and Millichap. Among the 88 cities that make up L.A. County, asking prices for Multifamily properties are 1.3% higher at $161,378 per unit, compared to the current median price of $147,763 per unit for Multifamily properties in the City of L.A. If you’re looking on the Westside, you’re looking at around $227,000 per unit.

Apartment developers and investors can enjoy another year or two of high occupancy and pricing power in a strengthening economy. But, in the not too distant future, the wave of new supply will break over us causing price fluctuations. The Santa Monica/Marina Del Rey submarket has already added 1,150 new units at high prices. The result is that local vacancy rates are up .5% to 3.6% in the first quarter, and effective rents declined 1.3% to $2,647…This is contrary to rents on the Westside as a whole, which climbed 4.5% to $2,346 per month between Q1 2012 and Q1 2013.

Overall, the good times continue to roll. The multifamily index gain of 0.8% in the first quarter was the best of the four major property types – but a notable decline from its quarterly average of 3.2% over the last two years, according to the CoStar Commercial Repeat Sale Indices. The apartment sector’s impressive performance has been driven in part by stronger fundamentals and in part by the flexibility of lenders, particularly Fannie Mae and Freddie Mac lenders, the government-sponsored enterprises that provide cheap debt for investors.

“Demand has been very strong for the last three years, with demand outstripping supply by a factor of three in 2010 and 2011, and new leasing activity bested inventory additions by a factor of two,” observes Erica Champion, senior real estate economist with CoStar’s Property and Portfolio Research.

Let the overbuilding in the Santa Monica/Marina Del Rey submarket be a cautionary warning > there are signs of a deceleration in apartment fundamentals as a result of growing new supply. Older buildings will start to lose value. Trade up while the getting is good.

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.businessweek.com/articles/2013-05-17/renters-face-a-housing-squeeze#r=hpt-ls

http://www.costar.com/News/Article/Will-Building-Boom-End-the-Party-for-Apt-Investors-/148604?ref=/News/Article/Will-Building-Boom-End-the-Party-for-Apt-Investors-/148604&src=rss

http://www.socalmultiunitrealestateblog.com/?p=2428

http://www.loopnet.com/Los%20Angeles_California_Market-Trends?Trends=AskingPricesFS,SalePricesFS,TotalAvailableForSaleFS,TotalNumOfUnitsFS,TotalSFAvailableFS,DaysOnMarketFS,AskingRentsFL,NumberOfListingsFL,TotalSFAvailableFL,DaysOnMarketFL&PropertyTypes=Multifamily http://4.bp.blogspot.com/-5qjg7I3J8UE/Tic3-PFqqBI/AAAAAAAAAJ4/fQYrBD5Fm4I/s640/the+TV+set.jpg

http://www.socalmultiunitrealestateblog.com/?p=2415

CALIFORNIANS TO STOP HIGHER PROPERTY TAXES

May 25, 2013 on 8:43 pm | In Economy, Events, Fascinating Information, Government, Legal, New Developments, Of Local Importance, Sellers, Trends, Uncategorized, WOW | 1 Comment

CBPA is a founding member of a coalition that has banded together to provide education and information about the problems related with eviscerating Proposition 13. The group is named Californians to Stop Higher Property Taxes. On your behalf, our coalition provides a website with lots of good resources for news and information related to attempts to increase your property taxes, including academic studies that show the negative impacts a split roll would have on California’s economy. Click here to visit the CSHPT website.

http://stophigherpropertytaxes.org/

http://www.capoliticalreview.com/wp-content/uploads/2012/03/prop-131.jpg

WESTSIDE APARTMENT MARKET UPDATE > WE’RE TALKING BRENTWOOD, WESTWOOD, BEVERLYWOOD, BEVERLY HILLS, SANTA MONICA, VENICE AND MARINA DEL REY

May 9, 2013 on 3:32 pm | In Buyers, Charts + Statistics, Curious, Fascinating Information, For Your Purchasing Pleasure, Market Snapshot, New Developments, Rents, Sellers, Trends, Uncategorized | 5 Comments

by Jodi Summers

Thinking about buying apartments on the Westside of L.A.? Here’s a tip for you, the Brentwood/Westwood/Beverley Hills submarket is expected to record the highest rent increase due to the paucity of new construction.

The last 12 months has seen 650 new multifamily units become available on the Westside, increasing stock by 0.5%, according to Marcus and Millichap in their recent Apartment Research Report. Approximately 380 of those units were delivered in the Santa Monica/Marina Del Rey submarket during that time.

Traditional vacancy rates for the area have been between 3.1% and 2.2% for the past two years. New units at high prices have pushed up the Santa Monica/Marina Del Rey vacancy rate to 3.6% in the first quarter. The Santa Monica/Marina Del Rey submarket is slated to receive 1,150 new units this year.

Effective rents at professionally managed properties on the Westside climbed 4.5% to $2,346 per month between Q1 2012 and Q1 2013. But, the Santa Monica/Marina Del Rey submarket recorded a 1.3% decline in effective rents to $2,647 per month to compete with new units. In Brentwood/Westwood/Beverley Hills, effective rents jumped 8.9% to $2,515 per month. Throughout the area, average revenue climbed 4.1% over the past year.

Competition for tenants is up, lease rates are down. Purchase prices are up, cap rates are down. Indeed, investors acquired 30% more apartment properties in the Westside Cities submarket during 2012 than 2011. In the most recent 12-month period ending in 1Q13, the median sale price climbed 11% to $227,000 per unit. The average number of units per deal hovered near 15 units as buyers sought assets that do not require on-site management. Cap rates are averaging in the high-4% range, down .4% from the previous year.

The desirability of the Santa Monica/Marina del Rey submarket is allowing sellers of local assets to command higher prices. Experts believe that future rent gains and appreciation are being priced into assets, which will raise challenges when the market begins to cool. Looking a bit further east to Brentwood/Westwood/Beverley Hills may yield purchases with better returns.

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.

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

http://www.socalmultiunitrealestateblog.com/?p=2415

http://www.kearch.com/wp-content/uploads/2012/12/koningeizenberg_village_d_1.jpg

SOCAL MULTIUNIT REAL ESTATE SNAPSHOT ~ MAY 2013 ~ AMAZING POSSIBILITIES

April 30, 2013 on 3:11 pm | In Buyers, Charts + Statistics, Economy, Fascinating Information, Investment Opportunities, Rents, Sellers, Trends, Uncategorized | 3 Comments

by Jodi Summers

Have you been astonished by all the new construction going on around town? They’re mid-rise multifamily projects everywhere! Apartment landlords have another quarter or two to enjoy tight supply growth before a large number of new properties come online.

In Los Angeles, during the first quarter, multifamily developers stepped up construction activity by 77%, permitting more than 12,700 units, notes Marcus and Millichap in their recent Apartment Research Report. As new construction comes online throughout the year, vacancy rates will pick up a minimal .2% to 3.9% while new renter demand grows 0.3%.

Get used to the term “new renter demand.” The U.S. economy is ripe for a surge of household formation, unleashing pent-up demand for everything from homes to weddings. We see it here, in Los Angeles, where our optimistic employment market is encouraging more residents to seek housing. Btw, unemployment in L.A. County has dropped to 10.2% in March 2013, down from 10.3% in February, and 11.2% from March 2012.

But don’t get too excited, new construction and rising rents will limit the pace of absorption. We seen rents in the Westside Cities and Downtown have climbed nearly 20% since the Great Recession. Renters that signed bargain leases a couple of years ago in non rent control properties may find themselves relocating to less-expensive areas. In the boom markets, robust job growth will refill most newly vacant units.

In 2013, professionally managed apartments are expected to record an average increase in effective rents to $1,705 per month, up 4.5% from the average at the end of last year. In 2012, effective rents climbed 2.1%.

If that’s not enough good news, here are more statistics as to why apartment rentals will stay strong…If you take traditional financing methods; rents at hip apartments are $500 per month higher than the monthly mortgage obligation on a median-priced home. But here’s the catch, in 1Q the median single-family home price in L.A. County was $330,300. The median household income of $53,600 is currently $21,000 below the minimum qualifying income for a median-priced home. Mortgages may be more reasonable than rents at newer apartments, yet less than half of the households in Los Angeles County qualify for a median-price home. Thus, our apartment market will stay strong.

Buyers should note that multiunit cap rates are currently in the low-6% range because of stiff competition for properties. If you’re looking for a higher return, try the Mid-Cities area returned, which are currently seeing returns in the 7% range.

http://www.bloomberg.com/news/2013-04-18/new-households-created-as-u-s-kids-leave-home-cutting-research.html

http://www.multifamilyexecutive.com/cap-rates/is-multifamily-heading-toward-a-bubble.aspx?utm_source=newsletter&utm_content=jump&utm_medium=email&utm_campaign=MFEBU_042513&day=2013-04-25

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

http://www.socalmultiunitrealestateblog.com/?p=2404

http://www.moorerubleyudell.com/sites/default/files/image007.jpg

http://www.labormarketinfo.edd.ca.gov/

SOCAL MULTIFAMILY REAL ESTATE SNAPSHOT ~ APRIL 2013 ~ GROWING DEMAND

March 31, 2013 on 7:55 pm | In Buyers, Charts + Statistics, Market Snapshot, Rents, Sellers, Trends, Uncategorized | 2 Comments

by Jodi Summers

“We have a new generation coming into the work force they’re demanding multifamily housing, we’re seeing rental rates go up and vacancy rates going down,” shares Jerry Nickelsburg, Senior Economist for the UCLA Anderson Forecast.

Research concludes, multi-family housing developers remain upbeat in the key California markets of Los Angeles, San Francisco, and Silicon Valley…and they’re not just optimistic about the present, they’re confident that the multifamily market will stay strong for the next three year.

In the aftermath of the housing bubble and financial crisis, Americans have caught on. They have made three major improvements in their living conditions:

(1) reducing their private debts

(2) containing their expenditures, and

(3) living closer to work, ready to relocate if needed.

These three elements are influencing many Americans to move from single-family to multi-family homes. Reis Reports notes that apartment vacancy rates have declined to 4.5% (the lowest rate since 2002) in Q4 2012 from a peak of 8% in Q4 2009.

“One of the real bright spots in coastal California is multifamily markets,” confirms Nickelsburg. “Economic growth is going to translate into even more rapid growth in California because technology is driving this recovery, manufacturing is driving this recovery, and California is still the largest manufacturing state in the country. What that translates to is rising incomes in California and rising demand for multifamily housing.”

http://uclaforecast.com/allenmatkinsCRES/

http://www.youtube.com/watch?v=8f1wUAkNMZE

http://www.socalmultiunitrealestateblog.com/?p=2382

http://www.bloomberg.com/image/igjtGgi3PJGM.jpg

http://www.jewishjournal.com/los_angeles/article/israeli-americans_make_good_on_giving_back_20120509

http://www.calculatedriskblog.com/2013/01/reis-apartment-vacancy-rate-declined-to.html

SOCAL MULTIFAMILY REAL ESTATE SNAPSHOT – MARCH 2013 ~ STURDY DEMAND

February 27, 2013 on 8:44 pm | In Buyers, Charts + Statistics, Economy, Investment Opportunities, Market Snapshot, Rents, Sellers, Trends, Uncategorized | No Comments

by Jodi Summers

Los Angeles apartment property buyers rejoice. The pundits predict that the Los Angeles metro area multifamily market will continue to record steady economic growth through major construction projects, a rebound in tourism and continued expansion in the entertainment industry.

If you already own, rental returns are satisfying. Apartment rents in Los Angeles rose 6.2% last year, according to the USC Lusk Institute. Tight leasing conditions will push rent growth up 4.1% in 2013 and 5.1% in 2014. The average rent will advance from $2,172 per month in 12-12 to 2012 to $2,376 per month by December of 2014.

With that kind of return on investment, apartment properties are still in strong demand in Los Angeles.

“…Investors are moving beyond core properties and driving up pricing at the lower end of the market,” observes Dr. Ruijue Peng, author of the CoStar Commercial Repeat Sale Indices.

The idea of investing in multifamily properties is popular. Have you noticed all of the new construction around town? A large pipeline of new apartment product will enter lease-up in 2013 and 2014. Overall, developers added 1,670 units in 2012, but that was baby growth. West Los Angeles inventory will increase by 3,000 units by the end of this, with significant development occurring in the Santa Monica, Hollywood, Brentwood/Westwood and Airport Cities submarkets. Completions will tick down to 2,600 units in 2014.

Net move-ins of 2,560 units is anticipated for 2013 and net absorption of 2,610 apartments is forecast for 2014. Solid leasing trends in 4Q 2012 resulted in 480 newly occupied units, boosting 2012 absorption to 2,100 units, the highest number of net move-ins since 2004. 2011 saw 1,275 units absorbed into the marketplace.

Robust development activity will make life easier on local planning departments. Annual multifamily permit issuance will slip to approximately 2,600 units in 2013…but leap to 4,675 multifamily units during the following year.

Sturdy rental demand will mitigate the effects of new apartment supply. Average vacancy rates may rise slightly this year to 4.2%, but will drop back to 4.0% in 2014.

The strength of the multiunit market place has pushed the median sold price of apartment properties in Los Angeles up 25% when comparing 1-11 with 1-13, according to Clarus Market Metrics. Meantime, the number of Under Contract properties is up 31%. Desire is up, get yours while there are good options to be had.

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.