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The Pulse of the Market

Vacancy rates are declining all over. The South Bay-Long Beach area currently has a 2% vacancy rate as new renters are looking for affordability. Apartment vacancy rates also fell at least 350 basis points in Downtown Los Angeles and Westside markets. Inventory levels are still down although Orange County and San Bernardino County both saw small increases in inventory last week. Closed Sales Days on Market were extremely low in most areas with Orange County at just 8 days, Long Beach at just 13 days and San Diego County at just 12 days.

What to Expect

I expect that short days on the market will continue and I don’t see inventory levels increasing all that much. There are reports that suggest inventory won’t reach pre-pandemic levels until 2023 or 2024. With low vacancy factors and rents increasing, cap rates are expected to remain about the same or fall slightly. Unpaid rent debt from the pandemic should sort itself out, although it will take some time. While demand has rebounded, construction activity has not. Downtown Los Angeles will record a record decline in apartment deliveries this year.

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Mike Lembeck

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