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12/08/22
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LA County Q3 2022 - Multifamily Market Outlook
This update provided by NAI Capital Commercial
In Los Angeles County, the multifamily housing market continued enduring remnants of the statewide eviction moratorium, which was put in place March of 2020 thru September 30, 2021, and extended to expire on December 31, 2022. Tenants who can’t pay the rent after January 1st, 2023, can face eviction.
Given the economic uncertainty, sales volume has been mixed over the past five quarters as investors adjusted to buying and selling into a changing market environment. Sales volume totaled approximately $2.8 bil this quarter, down 12.2% from Q3 2021. The average cap rate increased 30 bps from the second quarter of 2022 to 4.2% this quarter.
On a quarter over quarter basis the market’s rate of growth for the average asking rent pointed a lower trajectory. The average asking rent in LA County grew a mere four tenths of a percent quarter over quarter.
The multifamily housing market will continue to adjust according to economic conditions. With mortgage rates surging to the highest level since 2002, homeownership has become out of reach for many borrows in the rental market.
While rents are unlikely to drop significantly anytime soon, a recent sharp rise in inflation and interest rates has made developers as well as investors wary. Multifamily housing units under construction in LA County totaled 34,001 in Q3 – down 1.9% quarter over quarter. Sales volume plummeted 33% over the same timeframe as the median sale price per unit dipped 1.8%. The shift in market conditions and demand for multifamily housing will continue into 2023.
This report was provided by:
J.C. Casillas
Managing Director, Research
NAI Capital Commercial
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