WESTSIDE APARTMENT MARKET UPDATE > WE’RE TALKING BRENTWOOD, WESTWOOD, BEVERLYWOOD, BEVERLY HILLS, SANTA MONICA, VENICE AND MARINA DEL REYMay 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 | No Comments
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 – firstname.lastname@example.org or 310.392.1211, and let us move forward together.
by Jodi Summers
Finally, we have some inventory in Ocean Park, Santa Monica. There are currently nine properties for sale in our dynamic walkable neighborhood at the beach, just north of Venice. Every day feels like a holiday in Ocean Park. Here’s what we can help you buy today, courtesy of Jodi Summers and the SoCal Investment Real Estate Group @ Sotheby’s International Realty – email@example.com or 310.392.1211, and let us move forward together.
asking price: $499,000
1 Bedroom, 1 Bathroom
IF YOU LIKE QUALITY & LOCATION, THIS RARE CORNER UNIT, OCEAN PARK, BEACH PAD IS FOR YOU. NICELY UPDATED & READY TO GO. LARGE NEW WINDOWS LOOKING OUT TO GREEN GRASS LOCATIONS. CROWN MOLDING THROUGHOUT. GATED, 2 CAR TANDEM PARKING (RARE FOR 1 BR UNIT). BEAUTIFUL FLOORS. GREAT NATURAL LIGHT & OCEAN BREEZE. OPEN FLOOR PLAN. SECURED COMPLEX.
asking price: $649,000
2 Bedrooms, 2.00 Bathrooms
AN ABSOLUTE DIAMOND IN THE ROUGH IN A SENSATIONAL LOCATION! THIS IS A WONDERFUL CRAFTSMAN COTTAGE SITTING ATOP THE HILL, IN OCEAN PARK, WITH OCEAN VIEWS AND A BEAUTIFUL FRONT GARDEN AREA WHICH WITH A LITTLE IMAGINATION COULD BE SENSATIONAL! NOT FOR THE FAINT OF HEART, THIS EXTREMELY PRECIOUS TURN-OF-THE-CENTURY 2 BEDROOM, 2 BATHROOM COTTAGE IS READY TO BE REMODELED AND RE-IMAGINED!
asking price: $690,000
1 Bedroom, 1.50 Bathrooms
GORGEOUS CORNER UNIT WITH LARGE PATIO TO TAKE IN GREEN BELT VIEWS AND WONDERFUL OCEAN BREEZES AT PRESTIGIOUS SEA COLONY II. ENJOY ALL THIS LOCATION HAS TO OFFER. CLOSE TO THE OCEAN AND MAIN STREET SHOPS AND RESTAURANTS. SIDE-BY-SIDE PARKING AND 24 HOUR SECURITY.
asking price: $1,295,000
# Units: 1, Lot Size: 4,652
FANTASTIC OPPORTUNITY ON HIGH TRAFFIC LINCOLN BLVD. CORNER LOT – LINCOLN AND NAVY. SMALL IMPROVEMENT ON PROPERTY. CURRENT TENANT IS CAR DEALER. 2003 PHASE ONE ON FILE. ZONED SMC4.
asking price: $1,395,000
# Units: 2, Lot Size: 4,796
WELL MAINTAINED DUPLEX NEAR THE CORNER OF BICKNELL AND MAIN. C2 ZONING. GATED ENTRANCE, WITH AMPLE PRIVATE PARKING FOR MANY CARS… TENANT OCCUPIED, PROPERTY SHOWN WITH ACCEPTED OFFER.
652 KENSINGTON RD
asking price: $1,395,000
3 Bedrooms, 1 Bathroom
BUNGALOW-INFLUENCED 1927 HOME IS LOCATED IN A QUIET NEIGHBORHOOD BLOCKS TO THE BEACH. INTERIOR REQUIRES YOUR ATTENTION WITH KITCHEN & BATHS IN NEED OF REMODELING. 3 BEDS 1 BATH ON FIRST FLOOR. 2ND FLOOR IS LARGE OPEN SPACE. ZONED FOR 2-3 UNITS. DETACHED NEWER 2 CAR GARAGE.
3009 2ND ST
asking price: $1,550,000
3 Bedrooms, 2.50 Bathrooms
THIS IS ONE OF THE LAST LOTS OF ITS KIND IN THE BEST SANTA MONICA LOCATION. TURN OF THE CENTURY HOME AND GUEST HOUSE JUST SECONDS TO MAIN STREET AND OCEAN PARK. SUN PORCH ENTRY, BRIGHT CHARM FILLED INTERIORS WITH ORIGINAL FIR FLOORS AND VINTAGE MOLDINGS. COOK’S KITCHEN WITH SERVICE PORCH, SECLUDED FRONT AND BACK YARDS. GUEST UNIT 1+1. TOTAL PRIVACY FROM MAIN HOUSE.
asking price: $1,795,000
2 Bedrooms, 2.50 Bathrooms
TURNKEY OCEAN VIEW TOWNHOUSE AT THE EXCLUSIVE 24 HOUR GUARD GATED SEA COLONY I AND JUST STEPS FROM THE BEACH. FEATURING HARDWOOD FLOORS THROUGHOUT. ALSO OFFERED FOR LEASE AT $6,850 PER MONTH.
asking price: $1,999,000
4 Bedrooms, 5.00 Bathrooms
AMAZING OPPORTUNITY TO BUY THIS UNIQUE LOT W/ PLANS & PERMITS READY TO BE PULLED TO BUILD A MODERN STYLE HOME APPROXIMATELY 6000 SQ FEET, COST OF CONSTRUCTION $1.5M PLUS $230K FOR POOL.18 MONTHS CONSTRUCTION SCHEDULE. PERMIT IS READY AND MUST BE PULLED BY APRIL 14, 2013. DEMO MUST START OCT 14.
Do let us know how we can move forward together in meeting your real estate goals 310.392.1211 or firstname.lastname@example.org.
The SoCal Investment Real Estate Group
Sotheby’s International Realty
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by Jodi Summers
People in Los Angeles are going to be renting for a long time. Did you ever calculate how long you have to work and save in order to afford a home? If you did, you understand why everybody’s renting. Here’s a nifty little chart courtesy of The Atlantic Cities to help you calculate the numbers.
Enjoy figuring out how many years it takes to save enough for a down payment in Los Angeles or any of the 100 largest U.S. metro areas. The statistics come from factoring in local average wages from the Bureau of Labor Statistics’ Quarterly Census of Employment and Wages as well as local housing prices based on the median asking price per square foot of homes listed on Trulia.
The study estimated that people saving for a down payment set aside 10% of their pre-tax earnings and will earn an annual return of 1.5% on those savings. They assumed a 20% down payment, the minimum you can put down without paying insurance on your mortgage.
Notice that affordability varies hugely across metro areas. Sure, individuals have the potential to earn more money in most metros with higher housing costs – but those high wages usually aren’t high enough to offset the even higher housing costs. Among large metros, average weekly wages range from $655 in El Paso to $1809 in San Jose – almost three times as much. But median price per square foot runs from just $46 in Detroit to $459 in San Francisco – nearly ten times as high.
As you can see from the table below, in Los Angeles County, you’ll need to work 15.5 years in order to save enough for a 20% down payment on a typical 2,000 square-foot home costing $236 per square foot….It takes even longer in Orange and Ventura Counties….not to mention Santa Monica, were last month the average sale price is $660.38 per square foot for single family homes and condos combined. So, how long does it take to buy a home in the L.A. area? You do the math.
by Jodi Summers
Thinking about getting a loan to buy some units? More than $12.2 billion in FHA-backed multifamily loans were endorsed in fiscal year 2012 among 55 lenders. The top 10 lenders handed out more than $7.8 billion in multifamily mortgages. Bet you’d like to know who the top in FHA-backed multifamily lenders…
by 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 – email@example.com or 310.392.1211, and let us move forward together.
by Jodi Summers
If new construction is a signal that our recession is coming to an end, then we’re golden on the West Side of Los Angeles. The Expo Line light Rail development has been inspiring the construction of new residential and commercial hubs and new urban hamlets are popping up near the beach. Here’s an update on new development on Los Angeles’ West Side.
Sales Statistics and Trends
■ The median price of West Side apartment properties sold in the last year was $210,400 per unit, up 7% from the previous four-quarters.
■ Cap rates for sold Westside multiunits averaged in the mid-5% range. Exprest says the statistic emphasizes the strength and stability of the area.
■ Outlook: More investors will deploy capital in Koreatown this year, as efforts to redevelop the neighborhood come to fruition. Some local buyers will acquire less desirable assets at 7% cap rates, then sell at 5% yields after significant rehab work.
Rents Will Be Strong
■ Asking rents in the area were 1.3% higher than in 1Q 2011, averaging $1,929 per month. In 1Q 2010, there was a 0.2% decline in asking rents.
■ Effective rents gained 2.0% to $1,862 per month in the last 12 months as absorption picked up. Effective rents surged 4.1% in the previous year.
■ Concessions have been minimized. The average leasing incentive was 13 days of free rent in 1Q. Bonus to owners > average revenues grew 2.0% since 1Q 2011, an increase from the 0.6% bump of the prior year.
■ Asking and effective rents rose 1.0% and 1.3% last year, with stronger growth expected in 2012. Asking rents are expected to grow 3.6% to $1,980 per month, yielding an eff ective rent gain of 3.8% to $1,901 per month.
New Construction Will Not Impact Vacancy Rates
■ Westside apartment inventory rose by 161 units in the last 12 months, with 70 units completed in the first quarter. The increase grew rental stock 0.1%.
■ Nearly 1,700 units are under construction on the West Side – with the anticipated completion on 2/3rds of the rentals expected in 2013. In the planning stages are an additional 2,400 market-rate units.
■ A resurgence in local employment, particularly by tech and private companies, has sparked an increase in household formation. Consequently, the vacancy rate fell to 3.3% in 1Q.
■ Outlook: The completion of 540 units locally will have minimal impact on vacancy this year. Vacancy rates on the Westside will tumble to 2.8% in the 4Q.
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 – firstname.lastname@example.org or 310.392.1211, and let us move forward together.