LA Apartment Sales Down for 3rd Consecutive Quarter
LA Apartment Sales Down for 3rd Consecutive Quarter
Los Angeles apartment building sales are down big so far in 2023, and we’ve seen our 3rd consecutive quarter of declining transactions.
Q1 of this year saw approximately 280 buildings trade for $1.6 billion, which is far below the 640 properties at $2.3 billion that have transacted on average each quarter over the past 10 years.
The LA multifamily market’s average sale price is down 15% from its recent peak in Q2 2022 ($380K/unit vs. $325K/unit).
While the decline in pricing and volume can be largely attributed to the elevated cost of debt and to economic uncertainty, many also point to unprecedented new tax laws that passed in the cities of Los Angeles and Santa Monica (Measures ULA & GS).
With this all being said, we are continuing to transact in the marketplace and have seen some recent positive markers for the real estate industry over the past 2 weeks, like declining levels of inflation and a dip in the cost of borrowing.
*Data provided by Costar
Capital Markets Update
The CPI (inflation) print on Wednesday this week reflected a 5% YoY figure, which just beat expectations. We’ve made significant progress from last summer where inflation reached 9% at its peak.
Still a ways to go until we arrive at the Fed’s ~2% inflation target.
The Fed’s next meeting will be May 3rd (which also happens to be my 28th birthday). At the time of writing, there is a 65% predicted chance of another 25 basis-point hike before the Fed is expected to pause for the rest of the year (https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html).
Despite the doom & gloom surrounding the deposit issues regional lenders are facing, the regional banks and credit unions represent an overwhelming percentage of our current deals in the pipeline set to close in Q2. We continue to identify regional bank and credit unions pricing in the low to mid 5% interest rate range with flexible prepayment penalties on multifamily and retail assets.
Select quote this week on stabilized deal:
Multifamily, CA
20 Unit Purchase
3 Year Fixed
$3,200,000
5.36%
30 Year Am
Prepay: 3,2
Financing needs? Reach out to me or Greg Kavoklis, our Capital Markets Director, to set up a 5-minute call: gregory.kavoklis@matthews.com | 818-206-5835.
Weekly Market Activity – WeHo, Beverly Grove, Pico-Robertson, Fairfax, Mid-City
90019, 90035, 90036, 90046, 90048, 90069
4/14/23, Last 7 Days
New Listings:
1. 1824 S Highland Ave [90019] – 4 Units for $2.05M, $435/sf, 4.83% Cap, 15.35 GRM
2. 930 S Mansfield Ave [90036] – 19 Units RTI for $3.5M, 8,255 Sqft Lot, R3 Tier-3 TOC
New Closings:
1. N/A
Reach out to me with any questions or valuation requests.
And as always, thank you for reading.
