SOCAL MULTIUNIT REAL ESTATE SNAPSHOT – NOVEMBER 2011 > BLAME IN ON THE EEC

By Jodi Summers

Fear and doubt…that’s what it was…but all areas of U.S. investment felt it in the 3^rd quarter. The recent debt crisis fear that rippled through the European Economic Community found its way to our side of the pond > our stock market trembled, and so did Los Angeles County Multiunit real estate activity. Trembled mind you, this will be just another quarter in the long term scheme of things.

All-in-all, prices on Los Angeles multi-tenant properties remained strong, but volume dropped…even when compared to the previous quarter.

“We’ll just keep shopping,” note undeterred buyers.

There is good news for all in the Los Angeles Apartment Real Estate Market:

Median Sold Price by Month > comparing Sep-09 vs. Sep-11: The median sold price is up 6%.

Under Contract Properties by Month > Sep-09 vs. Sep-11: The number of under contract properties is up 4%.

Good news for owners / not so good for renters:

The Core U.S. Consumer Price Index notes that rent jumped by +0.2%, and the index for owner’s equivalent rent increased by +0.1%. This is an important category because it constitutes about 24.9% of consumer budgets – greater than the sum of gasoline (4.9%) and food (14.8%).

Good news for sellers of apartment buildings in Los Angeles:

New Properties by Month > contrasting Sep-09 vs. Sep-11: The number of new properties on the market is down 15%.

For Sale Properties by Month > Sep-09 vs. Sep-11: The number of for sale properties is down 16%.

Months’ Supply of Inventory > Sep-09 vs. Sep-11: The average months’ supply of inventory is down -21.1%

Consistent news for multiunit buyers: The Market is holding:

Median For Sale vs. Median Sold > Sep-09 vs. Sep-11: The median price of for sale properties is down 5% and the median price of sold properties is up 6%.

Indicators of a strengthening market:

Multi-family construction is improving according to according to IHS Global Insight indicators. Multi-family starts were up +51% nationally, propelled forward by a +141% jump in the South and a +52% increase in the West (which includes California).

Conversely, housing permits (a leading indicator) fell -5.0% to a 594,000-unit annual rate—the lowest reading in five months. Permits were down in three of four regions, and remain depressed and trendless nationally and in all four regions.

More good news if you’re thinking of buying:

According to the recent Emerging Trends in Real Estate 2012 Forecast, released by PriceWaterhouse Cooper and the Urban Land Institute, commercial experts still remain sold on walkable, 24-hour cities > though yields will stay small and anywhere else remains high risk. The experts agree that almost any class of apartment property is a good investment, as are technology sectors.

“Lock in your fixed-rate debt and focus on the blue-chip gateway markets,” concludes the Forecast. “The prices may be outrageous, but as some of our respondents said, do you have confidence anywhere else?”

We’re here to help you with your real estate needs. Please contact Jodi Summers and the SoCal Investment Real Estate Group @ Sotheby’s International Realty – jodi@jodisummers.com or 310.392.1211, and let us move forward together.

**

http://www.bls.gov/news.release/pdf/cpi.pdf

https://www.terradatum.com/agentmetricsonline/report_chart_view.td

http://www.nahb.com/

http://www.laedc.org/eedge/index.html#4

http://www.uli.org/~/media/ResearchAndPublications/EmergingTrends/ET_US2012_cover_200.ashx

http://www.socalmultiunitrealestateblog.com/?p=1567

http://beverlyhills.losangelesrealestatevoice.com/files/2011/02/WilshireApts-200x158.jpg