Multifamily Memo: Does Today's Market Favor Buyers or Sellers?

The Los Angeles multifamily market began shifting in mid-2022 as rising interest rates and recession concerns tempered the rapid appreciation seen over the previous two years. While pricing for many rent-controlled apartment buildings softened, the adjustment remained relatively modest, creating a market where both buyers and sellers could still find opportunities. Several recent transactions continued closing near values seen earlier in the year, despite changing market conditions.

Inventory also increased as properties spent more time on the market, giving buyers more options than they had become accustomed to. At the same time, investors shifted their focus toward immediate cash flow rather than future upside, placing greater emphasis on current cap rates and stronger underwriting. Well-priced properties continued attracting interest, while strategic pricing became increasingly important for sellers.

Despite broader economic uncertainty, Los Angeles continued to post strong rent growth and remained relatively insulated from the oversupply affecting many Sunbelt markets. Limited new construction and continued demand helped support long-term fundamentals, even as rent-controlled properties faced ongoing restrictions on rent increases.

What This Means for Investors

The 2022 market rewarded realistic pricing, disciplined underwriting, and a long-term perspective. While buyers gained more negotiating leverage, Los Angeles multifamily continued to benefit from limited housing supply and resilient rental demand, supporting investment opportunities despite higher interest rates.