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October 22, 2017
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NAI Capital Sees Continued Strength for LA Multifamily Market in Foreseeable Future

6/07/17

Demand for multifamily housing in Los Angeles held tight in the first quarter of 2017 – amid a surge of newly completed supply added to the market. According to NAI Capital’s just-released Multifamily Market Outlook, the vacancy rates remained low and rents continued to rise.

Market fundamentals remain strong, investors and developers continue taking notice. Driving the market is the growth in household formation exceeding the supply of housing units, which is causing vacancy rates to remain at historic lows and rents to hit record highs. In addition, the affordability of a median home in Los Angeles County is keeping many in the rental market.

Per the NAI Capital report, key indicators for the Los Angeles multifamily housing market remained strong in the first quarter of 2017:

• Average asking rental rate registered $1,778 per unit, up 4.0% over last year
• Vacancy (3.3%) was unchanged over the quarter, up 10 basis points over last year
• 14,065 units sold this quarter up 19.0% over the prior year
• Sale prices averaged $233,061 per unit, up 9.8% over last year
• Cap rates fell 26 basis points over the year to 4.4%
• 1,120 new units delivered this quarter, up 81.2% over first quarter 2016

According to Executive Vice President, Tim Steuernol with NAI Capital’ Multifamily Services Group, “Sellers are capitalizing on historically high prices due to low interest rates, high rents, and strong demand from local investors, 1031 exchange buyers, institutions and foreign capital. We live in an area where affordable housing options are very limited. It creates a wealth of opportunity for apartment owners to capitalize on a massive renter pool with the ability to pay rents at levels often higher than a traditional mortgage. As long as interest rates remain low and the job market is robust; I don’t foresee a slowdown in the market any time in the near future.”






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