SoCal Multifamily Sales Pulse - October 31, 2021 - November 6, 2021
Disclaimer: All information contained herein is obtained from sources believed reliable. We have not verified it and make no guarantee, warranty or representation about it. Any projections, opinions, assumptions or estimates used are for example only. We make no claim(s) as to the accuracy or reliability of the information presented. If you wish for us to analyze your specific property or situation please feel free to call or email us anytime.
Here's What's Happening In The Market, Here’s What This Means For You
Why Apartment Cap Rates Are Projected to Remain Low
Apartment cap rates are projected to stay low in the next couple of years. For these reasons:
1. Core inflation will likely stay elevated, which should force the Fed to push up rates. Rising Treasury yields are projected to squeeze the yield gap for apartments, and with strong prospects for NOI growth, apartment yields are projected to stay low.
2. Lower vacancy rates and accelerating rent growth will support apartment income. Demand for multifamily property is expected to remain strong and will continue to outpace supply.
3. While the pace of new construction has picked up significantly compared to the lows seen a decade ago, this is projected to not be enough to make up for current housing shortfalls. Until construction ramps up, housing shortages will persist, increasing demand for the rental market.
4. Rental growth for apartments is also projected to continue to outpace inflation, making it a good hedge against the pressure of rising prices.
Orange County
Orange County multifamily had 14 Closed Sales Last Week. This is the same number of closed sales as the prior week. The Closed Sales Average Days on Market sales was 44 days. This is a little bit higher than normal. It usually runs at around 30 days plus or minus a few days. There were 10 Transactions that Sold At or Above The Asking Price. This stat shows that there is still a strong demand for Orange County multifamily properties as buyers are competing for properties and have to increase their original offer price in bidding wars.
The Orange County Absorption Rate dropped from 2.27 months to 1.85 months. This is another indication of a tight buyer’s market. The number of active listings dropped again for the fourth consecutive month and is now at the lowest number of active listings since October of 2020. The total number of closed sales last month was up by 11 from the prior month and still shows a good level of activity in comparison to earlier this year. Even with the low level of inventory, we’re still seeing the number of closed sales outpace 2018, 2019, and 2020. The Average Price Per Sq. Ft. dropped quite a bit from $628 to $544.
The Orange County SALE OF THE WEEK is 3 unit building on Lido Ln. in Anaheim. The property was listed at $1,095,000 and sold for $1,105,000 in 34 days. The seller gave the buyer a closing cost credit of $20,000. So, the net selling price was $1,085,000. Built in 1962 the units consisted of one 3 bedroom 2 bath and two 2 bedroom 1 bath. The rents were already close to market with the 3 bedroom renting for $3,200 and the 2 bedrooms renting for $2,100 each. There are two double garages on the alley in the rear of the building. The property sold at $364 per sq. ft. The average price per sq. ft. in Anaheim is $446. Based on the income and expense info provided, the gross rent multiplier was 12.33. The average gross rent multiplier for Orange County is 14.95. The cap rate was 6.2%.
Orange County listing inventory had a good strong week with 18 new listings which brings the total number of active listings back up to 132 total listings. The typical number of weekly listings is usually somewhere between 10 to 15 new listings. The months of inventory remained the same at 3 months.
Live MLS and Sale of the Week Link expires in 30 days after published View Live MLS Data View PDF Version SALE OF THE WEEK
Long Beach
Long Beach multifamily had 8 Closed Sales Last Week. This is down from the prior week where there were 13 closed sales. The Closed Sales Average Days on Market was normal at 35 days. There were 5 of the 8 Transactions That Sold At or Above the Asking Price. With the majority of transactions selling at or above the asking price, Long Beach multifamily is showing strong investor demand just like Orange County.
The Long Beach multifamily Absorption Rate increased from 1.7 months in the prior month to 2.15 months currently. The Days to Sell Average was up to 38 days last month after dropping to just 28 days in the prior month. The number of active listings dropped again for the third consecutive month and is now at the lowest number of active listings since December of 2019. As you can see here the number of new listings each month has dropped slightly each month for the last 4 months. The total number of monthly sales was down last month but still remained strong in comparison to earlier this year and is better than most of 2020.
For Long Beach multifamily listing inventory, there were 11 New Listings Last Week. This is about average for the number of weekly new listings for Long Beach. The Total Number of Active Listings was up slightly to 95 total listings. The Months of Inventory remained at 3 months. The Active Listings, Dollar Volume slipped down to just over $203,000,000. This is the lowest Active Listings, Dollar Volume since December of 2019.
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 Angeles County multifamily had 80 Closed Sales Last Week. This is about average for LA County weekly closed sales. The Closed Sales - Average Days on Market was a little higher than normal at 46 days. There were only 24 Transactions Sold At or Above the Asking Price last week. This stat is quite a bit lower than normal as it typically averages about half of the weekly closed sales amount.
The monthly Absorption Rate dropped from 4.2 months to 3.66 months. Looking at the monthly stat charts. The Days to Sell Average has been dropping just about every month. Last month it was at 39 days. The total number of active listings has been dropping for the last 2 months after increasing most of this year. And as you can see the number of monthly new listings has dropped over the last 4 months. The total number of monthly sales was up slightly last month and is still averaging in line with previous months except for the slow down from COVID in March of 2020.
The LA County SALE OF THE WEEK is a 9 unit building on Beachwood Dr. in Los Angeles. The property was listed at $3,789,000 and sold for $3,700,000 all cash in 153 days. Built in 1961. This property was an REO sale and a value-add opportunity for the buyer. The property was initially listed at $4,300,000 and was reduced multiple times before selling. Five of the nine units were vacant. The units consisted of five 2 bedroom 2 baths and four 1 bedroom 1 bath. The property sold at $392 per sq. ft. The LA County average price per sq. ft. is $508. We don’t have a reliable gross rent multiplier or cap rate due to the five vacant units. Based on proforma numbers the gross rent multiplier was 12.34 and the cap rate was 5.69%.
LA County listing inventory rebounded from the prior week where there were just 95 new listings with 111 New Listings Last Week. The Months of Inventory dropped from 12 months to 11 months. After dropping below 1,700 total listings in the prior week the Total Number of Active Listings dropped again last week to just 1,577 total listings. This drop in active listings is anticipated with the upcoming holidays and the end of the year approaching.
Live MLS and Sale of the Week Link expires in 30 days after published View Live MLS Data View PDF Version Sale of the Week
San Diego County
San Diego County multifamily had 15 Closed Sales Last Week. This is fewer closed sales than normal for San Diego County and we’ve seen a downward trend for weekly closed sales in San Diego County over the last few weeks. The Closed Sales - Average Days on Market was just a little above normal at 35 days. As another indicator of strong demand, 9 of the 15 Closed Sales Last Week were Transactions That Sold At or Above Asking Price.
The San Diego County’s monthly Absorption Rate went from an already low 1.95 months in the prior month to just 1.23 months currently. San Diego County has the lowest Absorption Rate out of all the other areas in Southern California. Looking at the monthly stat charts the Days to Sell Average was the same as the prior month and is still very low at just 23 days. The Number of Active Listings took a big drop from the prior month. This has been the trend over the last 4 years. The Number of Active Listings dropped in November and December each year. The Number of New Listings dropped considerably, down to just 90 new listings last month. But the Number of Sales increased from 100 in the prior month to 109 last month. The Average Price Per Sq. Ft. has steadily increased over the last 4 months.
San Diego listing inventory had 18 New Listings Last Week. That’s about average for weekly new listings for San Diego County. The Total Number of Active Listings dropped from 152 listings in the prior week to 135 total listings last week. The Months of Inventory dropped from 12 months to 10 months.
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 had 7 Closed Sales Last Week. This is down from 10 closed sales in the prior week. The Closed Sales - Average Days on Market was 42 days. This is the lowest average days on market in the last 4 weeks. Out of the 7 Closed Sales Last Week there were 4 Transactions That Sold At or Above the Asking Price.
The Riverside County Absorption Rate was almost unchanged at 2.17 months. Looking at the monthly stat charts the Days to Sell Average was up from 35 days in the prior month to 59 days last month. Quite an increase. The Number of Active Listings continued its downward trend over the last 5 months. It’s now at the lowest it’s been since the start of COVID in March of 2020. The Number of New Listings bounced back to 52 new listings last month. The Number of Sales took a slight dip from 43 to 39 total sales for the month.
As far as Riverside County weekly listing inventory stats go there were 17 were New Listings Last Week. This bumps the Total Number of Active Listings back up into the 80’s with 84 total listings. The Months of Inventory remained at 4 months.
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 had a slow week in closed sales with 7 Closed Sales Last Week. This is the lowest number of closed sales in the last 5 weeks. The Closed Sales - Average Days on Market was 44 days. This is at the high end of the average. Just 2 of the 7 closed sales were Transactions That Sold At or Above the Asking Price.
San Bernardino County’s Absorption Rate dropped from 2.44 months in the prior month to 1.81 months last month. This is the second-lowest Absorption Rate in Southern California, just behind San Diego County. The Days to Sell Average dropped again for the second consecutive month, down to just 26 days. The Number of Active Listing was down for the third consecutive month and is now at the lowest it’s been in the last 4 years. And to go in line with the other two monthly stats the Number of New Listings plummeted from 79 new listings in the prior month to just 54 new listings last month. Even with the low amount of inventory, the monthly Number of Sales increased from 60 to 61 sales.
For the listing inventory for San Bernardino County, there were 7 New Listings Last Week. This is about average for San Bernardino County. The two stats that were significantly different were the Total Number of Active Listings, which went from 93 total listings in the prior month to 111 total listings last month. And the Months of Inventory went from4 months to 6 months.
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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