Jodi Summers = Multiunit Real Estate

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 Comments

by 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/

http://www.uli.org/press-release/u-s-commercial-real-estate-recovery-to-advance-in-2013-with-nationwide-gains-in-leasing-rents-pricing-according-to-pwc-us-and-urban-land-institutes-emerging-trends-in-real-estate-forecast/

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