OC Apartment Brokers
SoCal Multifamily Sales Pulse - January 25, 2021 - January 31, 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
There are a lot of mixed signals in the apartment industry right now. While valuations continue to rise, a lot of renters are still having trouble making their monthly payments.
In a recent report, Fannie Mae identifies another concern—increasing supply. Most of the new supply will consist of expensive Class A properties concentrated in about 15 urban core neighborhoods. It expects supply to continue outpacing demand in some places this year. This should drive the vacancy rate to between 6.0% and 6.5% in 2021. Still, it notes that this range is well below the most recent estimated vacancy peak of 8.25% in Q4 2009.
Another pressure on the asset class: last year rent growth turned negative for the first time since 2009, ending the year at negative 0.75%, after eight straight years of growth above historical averages. In 2019 estimated rent growth was 2.5%.
While rent growth slowed, demand stayed stable in 2020. CoStar Portfolio Strategy estimates that net absorption totaled 326,874 units last year, after about 320,976 units were absorbed in 2019. In 2021, CoStar projects only 113,178 units of net absorption.
Fannie Mae expects the negative rent growth trend to continue at the beginning of the year, but it also anticipates it will turn positive in the second half of the year. Overall, it projects rent growth will end 2021 at 0.0% to 0.5%, assuming widespread COVID-19 vaccinations and a sustained economic recovery.
Orange County
Just 6 Closed Sales last week for Orange County Multifamily. This is about half of the normal weekly sales amount of 12-15 Closed Sales. Closed Sales - Average Days on Market went from 72 days the prior week to 93 days last week. That stat was up from just 9 Average Days on Market 3 weeks ago. Months of Inventory is now up to 5 months from previously being at 3 months. Could the market be slowing? Most of the stat indicators show that it might be. This is something to keep a close eye on in the next few weeks. Hopefully, it's just the typical beginning of the year slow down.
Southern California
Long Beach Multifamily saw just about normal activity last week with 8 Closed Sales. Closed Sales - Average Days on Market went down to 25 days after being at 81 days and 38 days the prior 2 weeks. New Listings Last Week was about normal at 14 New Listings and the Total Number of Active Listings remained pretty steady at 129. Months of Inventory increased from 3 months to 5 months.
