Multifamily may have its lulls, but truth is more people want to live in Los Angeles than the city can house. Apartments in desirable locations and along mass transit lines are appealing investments. Did you notice that relatively few multifamily properties when into foreclosure during to downtown?
The current Allen Matkins / UCLA Anderson Forecast survey of multi-family housing developers focuses on three California markets – Los Angeles, San Francisco, and Silicon Valley. Looking ahead through 2016, the panel offered an optimistic view about the prospects for returns on multi-family housing. The report concludes that the market outlook is sufficiently bright for 55% of selected developers who will initiate new multifamily projects in the next year.
In Downtown Los Angeles, apartment vacancy rates have fallen to about 2% spurring a host of new apartment projects including the inspiring Grand Avenue mixed use development. Favorable fundamentals and a Los Angeles City plan to facilitate permitting of multi-family projects near the newly opened light rail lines marks the beginning of a building boom in L.A. County.
Upstate, the booming San Francisco market has seen rents increase at double-digit rates and vacancies fall to approximately 3%. This has given rise to a number of new building projects including the massive Park Merced, Treasure Island, Mission Rock, Pier 70 and Hunter’s Point developments as well as a flurry of new apartment building in The Mid-Market District.
As the Los Angeles multifamily market, as long as demand outpaces supply, it is always a good time to invest. Sooner rather than later will be easier on your bank accounts.
“Debt costs for apartment firms have been rising. In addition to the 90 basis point increase in interest rates from the April survey, spreads over Treasuries have also gone up, likely dampening transactions somewhat. Rates are still low by historical standards, however, and at current levels should not put too big a crimp in apartment activity going forward, “observed Mark Obrinsky, Senior Vice President for Research and Chief Economist National Multi Housing Council’s Quarterly Survey of Apartment Market Conditions. “Underlying demand trends remain strong, and we are approaching the cusp of a meaningful increase in supply that will hopefully be enough to meet the current need for apartment homes.”
As job formation continues in the coming years, so will household formation and the demand for multi-family housing is expected to remain strong Expect a balance between new additions to multi-family housing and the absorption of those additions by 2016.
For more information 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.
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