SoCal Multifamily Sales Pulse - September 12, 2021 - September 18, 2021
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Here's What's Happening In The Market, Here’s What This Means For You
House Tax Plans Lessen Pain for CRE Investors
Recent moves in Congress and the White House seemed to close doors on tax benefits for commercial real estate. But while a new proposal from House Ways and Means Committee chair Richard Neal does mean higher taxes, it would also temper some potential pain.
Long-term capital gain rates are currently slated to increase from 20% to 25%, or 28.8% including [an additional] net investment income tax, which to some might see as a relief since the original proposal had indicated these rates would increase to ordinary rates for high earners. Ordinary rates meaning a top 39.6% for individuals making more than $1 million a year that the Biden administration had proposed.
Something to remember, though, is that any such proposal is just that. With the need to pass the measure in the House, where some of the softening may not be popular, and to reconcile that version with the Senate, there’s no way to tell yet what might happen.
Orange County multifamily had 11 Closed Sales Last Week. This is up slightly from the prior week when there were just 8 closed sales. This is still a bit low for Orange County as Orange County usually averages around 12-16 closed sales per week. The Closed Sales - Average Days on Market remained about normal at 31 days. 6 of the 11 Closed Sales Last Week were Transactions That Sold At or Above Asking Price.
This week’s SALE OF THE WEEK for Orange County is a 4 plex located on Newhope St. in Garden Grove. This property was initially listed for $1,300,000 and sold for $1,400,000 in 2 days. The property was built in 1976. The units consisted of one 3 bedroom 2 bath and three 2 bedroom 2 bath units. The units were updated in the last 5 years with newer appliances and finishes. There was room to increase the existing rents by approx. 20%. There are three 2 car enclosed garages and one 1 car garage. This 4 plex sold for $325 per sq. ft. The Orange County average price per sq. ft. is $651.
Orange County had a strong week for new listings last week with 19 new listings. Even with the strong week of new listings, the Total Number of Active Listings remained at 135 total active listings which is just about the same as the prior week when there were 133 total active listings. Months of Inventory remained at 2 months.
Long Beach multifamily had a strong week of sales with 14 Closed Sales Last Week. This is the highest number of closed sales since the week of August 15-21 when there were also 14 closed sales. The Closed Sales - Average Days on Market was normal at 23 days. 8 of the 14 Closed Sales Last Week were Transactions That Sold At or Above Asking Price. There were two closed sales that were purchased using FHA financing and one closed sale that was purchased using VA financing.
This week’s SALE OF THE WEEK for Long Beach was a 4 plex located on San Anseline Ave. This 4 plex was listed at $1,399,000 and sold for $1,400,000 in 7 days. The property is located in a high-demand area of Long Beach known as Los Altos near Long Beach State. The property was built in 1950. The units consisted of one 3 bedroom 1 bath, one 2 bedroom 2 bath and two 1 bedroom 1 bath units. There was significant upside in rents of approx. 35-45%. The property sold at $415 per sq. ft. The average price per sq. ft. in Long Beach is $513.
Long Beach inventory had 7 New Listings Last Week. This number of new listings is about normal for weekly listings for Long Beach. The Total Number of Active Listings dropped back down below 100 after reaching 104 listings in the prior week. Active Listings, Dollar Volume increased to just above $234,000,000. Months of Inventory remained at 3 months.
Los Angeles County
Los Angeles County multifamily had 77 Closed Sales Last Week. This number of closed sales is identical to the closed sales in the prior week when there were 77 closed sales. This is again a low number of weekly closed sales as LA County typically averages closer to 100 closed sales per week. Closed Sales - Average Days on Market remained about normal at 41 days. There were 31 Transactions That Sold At or Above Asking Price. This is lower than typical as LA County typically has about half of the weekly closed sales that sell at or above asking price.
This week’s Los Angeles County SALE OF THE WEEK is an 18 unit building on Jasmine Ave. in Los Angeles. The property was listed at $6,500,000 and sold for $6,500,000 in 32 days. The units consisted of two 3 bedroom 2 baths, three 2 bedroom 2 bath units, eleven 1 bedroom 1 baths, and two studio units. Current rents are approx. 20-25%. The property was built in 1964. The seismic retrofitting on the parking structure had already been completed. The property sold for $411 per sq. ft. The LA County average price per sq. ft. is $505.
Los Angeles County listing inventory had 133 New Listings Last Week. This is about average for weekly new listings for LA County. The Total Number of Active Listings remained below 1,800 again for the third consecutive week. Months of Inventory remained at 11 months.
San Diego County
San Diego County multifamily had 16 Closed Sales Last Week. This is about average for San Diego County weekly closed sales and up from the prior week where there were just 8 closed sales. 11 of the 16 closed sales were duplexes. Closed Sales - Average Days on Market was just 19 days. San Diego County multifamily has the second-lowest Absorption Rate at just 1.79 months, just behind Orange County which is at 1.75 months.
San Diego listing inventory had 10 New Listings Last Week. This is less than half of the typical number of weekly new listings for San Diego County. San Diego County typically averages around 20+ new listings per week. The Total Number of Active Listings dropped below 200 listings again last week after hitting 204 listings in the prior week. Months of Inventory remained at 11 months.
Riverside County multifamily had 8 Closed Sales Last Week. This is the same number of closed sales as the prior week. This follows the previous weeks of closed sales of only 3-6 closed sales. Closed Sales - Average Days on Market was 22 days. 6 of the 8 Closed Sales Last Week were Transactions That Sold At or Above Asking Price. This indicates continued strong investor demand for Riverside County multifamily properties.
Riverside County had 9 New Listings Last Week. The Total Number of Active Listings was the same as the prior week at 97 Total Number of Active Listings. The Total Number of Active Listings remained below 100 for the last 3 weeks. Months of Inventory remained at 4 months.
San Bernardino County
San Bernardino County multifamily had 13 Closed Sales Last Week. This is a little more than average for weekly closed sales for San Bernardino County. Typical week’s closed sales are around 10 closed sales or less. Closed Sales - Average Days on Market was 23 days. This stat is low but about average for San Bernardino County as demand is strong for low gross rent multiplier, high cap rate properties in Southern California. 6 of the 13 closed sales last week were Transactions that Sold At or Above Asking Price. There were 3 FHA financed transactions out of the 11 Financed Transactions Last Week.
San Bernardino County listing inventory had 15 New Listings Last Week. This is average for weekly San Bernardino County new listings. The Total Number of Active Listings remained above 140 for the second consecutive week with 145 total active listings. Months of Inventory remained at 7 months. Active Listings, Dollar Volume hit above $211,000,000 for the first time in 2 months.