Los Angeles Multifamily values reach an all time High

Posted on Mar 17, 2015

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The average asking price for Los Angeles Apartments has reached a level of $211,000 per unit for the 1st quarter of 2015′, which has now surpassed the pre-crash high of $204,000 per unit back in the 3rd quarter of 2007′.  As the Loopnet graph to the right illustrates, the bottom of the SoCal multifamily was reached right around the 1st quarter of 2012′, and has been on a tear ever since.   Back then, multi-unit asking prices where around $135,000 per unit, and have gone up 56% in the past 3 years.This relative sudden rise in prices since 2012′  is due to 4 factors as follows…
1) Interest rates are at an all time low due to the Fed’s Quantitative Easing programs.
2) As a by-product of years of free-flowing and cheap federal funds, investment yields in all types of categories are at all time lows.  Specifically, CAP rates in the Southern California region for multifamily properties are hoovering around 4% to 5%, for Class A and B properties.
3) The financial crash – Great Recession that started in 2008, essentially put a halt on all new construction of apartment buildings for several years.
4) Los Angeles, as well as other coastal cities, has seen a gradual rebound in job growth and residential home prices, which has put upward pressure on apartment rent rates.

All of this adds up to record breaking multifamily property values in southern California and elsewhere.