SoCal Multifamily Sales Pulse - January 18, 2021 - January 24, 2021
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Here's What's Happening In The Market, Here’s What This Means For You
CRE investors may have missed the window for distress. Three quarters into the COVID crisis, distressed sales again account for 1% of transactions. In the last downturn, some CRE investors were able to scoop up distressed assets by this point in the cycle. But so far, those conditions haven’t materialized in the Covid-19 crisis, according to Real Capital Analytics.
The Global Financial Crisis started in December 2007. In Q1 2008, commercial property price growth turned negative when the RCA CPPI US National All-Property Index dropped 2.6% year-over-year.
In early 2007, distressed sales totaled less than 0.5% of commercial real estate transactions. In Q1 2008, they inched up to just under 1%. By the end of 2010, distressed sales were 20% of the total sales market, according to RCA.
Fast forward to today: three quarters into the COVID crisis, distressed sales again account for 1% of transactions. RCA notes that the three-month mark was when the price declines in the GFC began.
That’s where this current COVID crisis seems to differ so far. While the pace of price increases has slowed, it is still growing, with the All-Property Index showing a 5.7% year-over-year gain. RCA expects the Q4 2020 RCA CPPI figures, which will be released shortly, will not show the start of the same sort of price declines as at the beginning of the last downturn.
It may be that potential buyers of distress have missed their window. With the vaccines being rolled out, there is an end in sight to the COVID crisis. Given what seems like a temporary situation, it’s hard to see owners or banks taking a loss on their assets. Instead, RCA says they’ll continue to paper over problems.
CoStar Group expects a large scale of distressed sales to hit mid-2021 and pass the number of those transactions in the GFC. The company modeled 16 different scenarios to determine how bad the carnage would be from this recession. In those exercises, the amount of distress landed between $92 billion to $370 billion, though it will likely be $126 billion.
“It’s a pretty wide range,” says Xiaojing Li, managing director at CoStar Group. “We think it [the amount of distress] could be a blended scenario that is somewhere in the middle.”
Orange County
Still showing strong activity, Orange County saw 14 Closed Sales last week which is up 2 Closed Sales from the prior week. Closed Sales were on the market for 72 days prior to selling. Only a little bit higher than normal but still pretty minimal. New Listings were way down at 7 last week from 22 New Listings the prior week. Some sellers must have waited for the first of the year before placing their property on the market. There were very few Expired Listings in the last 2 weeks with just 1 Expired Listing 2 weeks ago and no Expired Listings last week. This shows if you put your property on the market in Orange County at a realistic market price it will sell.
Live MLS and Sale of the Week Link expires in 30 days after published View Live MLS Data View PDF Version
Long Beach
Long Beach had only 4 Closed Sales last week. That's down from 8 in each of the two prior weeks. Is the demand for Long Beach multifamily slowing? Probably not, as 3 of the Closed Sales Sold At or Above the Asking Price. New Listings and Months of Inventory stayed pretty constant with 12 New Listings and Months of Inventory remained at 3 months. The Total Number of Active Listings has increased over the last few weeks from 114 two weeks ago to 131 last week.
Live MLS and Sale of the Week Link expires in 30 days after published View Live MLS Data View PDF Version
Los Angeles County
Los Angles County multifamily Closed Sales remained pretty steady with 69 Closed Sales last week with an Average Days on the Market of just 37 days and 31.8% of the Closed Sales selling At or Above Asking Price. With 140 New Listings last week we still had a drop in the Total Number of Active Listings from 1,834 to 1,715. Active Under Contract listings and Pending Listings Last Week were both the same as usual so activity in Los Angeles County multifamily has remained strong at the start of 2021.
Live MLS and Sale of the Week Link expires in 30 days after published View Live MLS Data View PDF Version
San Diego County
San Diego County multifamily sales remained strong with 14 Closed Sales Last Week. There were 18 and 15 Closed Sales in the two prior weeks. There were 6 Transactions Sold At or Above Asking Price last week which is almost half of the Closed Sales from last week. San Diego County has been averaging about 50% of the Closed Sales selling At or Above the Asking Price consistently. Inventory levels have also held steady with a slight increase overall from 169 Total Number of Active Listings 2 weeks ago to 180 Total Number of Active Listings last week. Pending Listings have seen an increase of 10 Pending Listings two weeks ago to 19 Pending Listings last week.
Live MLS and Sale of the Week Link expires in 30 days after published View Live MLS Data View PDF Version
Riverside County
Riverside County multifamily Closed Sales were down to just 3 Closed Sales last week. Normally the amount typically ranges around 6-8 Closed Sales per week. The Closed Sales - Average Days on Market has dropped in each of the last 3 weeks from 48, 58, and now 39 days. So demand is staying strong for the available listings which remained fairly consistent at just 110 Total Number of Active Listings. Riverside County Closed Sales were purchased using financing as there were no All Cash Transactions over the last 3 weeks.
Live MLS and Sale of the Week Link expires in 30 days after published View Live MLS Data View PDF Version
San Bernardino County
San Bernardino County multifamily sales numbers came in with 10 Closed Sales last week. This could be considered "normal activity" for San Bernardino County multifamily sales. There was an increase in inventory with 20 New Listings Last Week. Normal New Listings Last Week is usually around 7-10 new listings. Some sellers must have waited for the first of the year before placing their property on the market.
Live MLS and Sale of the Week Link expires in 30 days after published View Live MLS Data View PDF Version
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