Why this continues to support multifamily demand.

The U.S. housing market continues to send mixed signals. While affordability has improved modestly thanks to steady wage growth and relatively flat home prices, new-home demand has slowed considerably. At the same time, residential construction activity has fallen to its lowest level since 2020, creating conditions that could benefit apartment owners over the next several years. One of the most notable trends is the shrinking construction pipeline. Residential housing starts

A week ago, the Los Angeles Controller’s Office released what it called the “Top 100 Rental Properties” list in LA. As I started going through the addresses, I noticed something interesting. I recognized many of the properties not because I was involved in them, but because a surprisingly significant number of them have traded over the past few years. Roughly 16% of the buildings on the list have sold within the last 4 years. That raises a bigger issue. Instead of focusing on

The ADU Parking Tradeoff in LA Multifamily A lot of LA multifamily owners are adding ADUs right now, but there’s no clear consensus on the best strategy. I’m seeing two very different approaches: Some owners are eliminating parking entirely to maximize unit count Others are adding a few ADUs while preserving most of their existing parking There’s no “right” answer. It’s a classic short-term vs. long-term tradeoff. Short term: Units without parking are generally harder to leas

One thing I don't think enough people are talking about: The buyer pool for LA multifamily may be considerably bigger in the next 6 to 18 months. Once the lock-up periods expire and liquidity events occur at companies like SpaceX, Anthropic, and OpenAI, there will be a massive amount of new wealth created, especially here in California. If you're a tech employee who suddenly has a few million dollars of liquid net worth, LA multifamily starts to look pretty attractive. You ca

The biggest risk in LA multifamily today isn’t interest rates, rent control, or new supply. It’s habitability claims. The tough part is this: There doesn’t even need to be a real habitability issue to get pulled into a sizable lawsuit. We’re seeing more tenant attorneys actively targeting buildings, finding small issues, and turning them into leverage. Most owners don’t realize how exposed they are until they’re already dealing with it. This is no longer just a legal issue. I

A new construction multifamily investor came into my office this week to hear our marketing pitch on the value of one of his Hollywood buildings. After I shared the valuation, he pulled up ChatGPT and said: “Chat told me cap rates are between 4–5%, not 6% for new product.” What I took from that: Chat and any AI model is only as good as the data you give it. With no real inputs, it can actually hurt valuations and underwriting. Especially in a market like LA where everything i

The Los Angeles multifamily market may be entering a new phase of recovery. The defeat of vacancy control initiatives has improved investor confidence, allowing buyers to once again evaluate value-add opportunities rather than focusing solely on in-place cash flow. Institutional capital, which had largely remained on the sidelines, may begin returning to the market. While financing remains a challenge, the outlook is becoming more balanced. Although the Federal Reserve has be

California's new SB 1211 legislation gives multifamily owners another tool to unlock value from existing properties. Beginning January 1, 2025, qualifying multifamily buildings may be able to add up to the existing unit count in new ADUs, creating new opportunities for owners to increase housing supply and improve long-term property performance. Larger lots with excess parking or open space may offer the greatest upside. The featured Highland Park example illustrates how thou

Single-family accounts for a growing share of development. Multifamily and single-family construction trends are moving in opposite...

As 2023 came to a close, the Los Angeles multifamily market began showing encouraging signs of stabilization. Rent increases for RSO properties were set to resume in early 2024 after several years of freezes, giving investors renewed confidence in rent-controlled assets. At the same time, well-priced listings continued attracting multiple offers despite a significant increase in available inventory across Los Angeles County. Creative financing also became an increasingly impo

Inflation Continues to Show Varied Trends The headline consumer price index (CPI) showed a slight uptick in July, rising by 3.2 percent...

Understanding the ever-changing economic landscape is crucial for both individuals and businesses. In this blog post, we delve into...

As we navigate the ever-changing economic landscape, understanding key indicators like inflation and housing dynamics becomes crucial. In...

The Los Angeles multifamily market continued to adjust to higher interest rates during the first half of 2023, but signs of stability began to emerge. While buyers and sellers remained divided on pricing, cap rates gradually increased and more realistic seller expectations helped create opportunities for investors looking to expand their portfolios. Buyers with smaller portfolios were among the most active participants as the market searched for a new equilibrium. Financing c

The Los Angeles multifamily market entered 2023 in a period of adjustment as higher interest rates and tighter lending standards reshaped investment activity. Financing became more expensive, loan proceeds declined, and many investors began underwriting for a longer period of elevated borrowing costs. As a result, buyers became more selective while sellers faced increasing pressure to adjust pricing expectations. Rising interest rates may lead to more owners bringing properti

Los Angeles Multifamily Market Update March 2023 By: Jason Tuvia Where are Interest Rates Now for LA Multifamily? Many lenders have...

The Los Angeles multifamily market closed out 2022 in a period of transition as rising interest rates reshaped investor expectations. Although borrowing costs climbed into the 6% range, recently closed rent-controlled apartment transactions still averaged relatively low cap rates, highlighting continued demand for quality assets. At the same time, the gap between buyer and seller expectations widened, slowing transaction volume across the market. Despite concerns about higher

Hiring continues, but signs of slowdown emerging. The labor market welcomed 263,000 new jobs in September, above the long-term monthly...

Home purchases and prices stay on the descent. In the wake of the Federal Reserve’s fifth interest rate hike so far this year, borrowing...