Q1 2023 Multifamily Market Outlook – Los Angeles
Market Overview
Since authorities lifted pandemic-era state and local eviction protections, multifamily housing vacancy rates and rents have risen in Los Angeles County. As of January 1, 2023, tenants who are unable to pay rent may face eviction. Despite some landlords now collecting unpaid rent from tenants who have not paid for years, vacancy rates for rental units have slightly increased in Q1 2023, moving up 20 bps quarter over quarter to 4.2%, which is an increase of 70 bps from the previous year. Completed construction has also dropped by 12.6% quarter over quarter, with multifamily housing units under construction decreasing by 2.6% from the previous quarter to 34,902 units.
Trends to Watch
The Federal Reserve has impacted economic conditions, through its increase in the interest rate, affecting the demand for multifamily housing and the financing available to developers and investors. With credit conditions tightening, the multifamily housing market is experiencing an adjustment to high inflation, rising borrowing costs, a weaker growth outlook, and elevated financial risks. In Q1 2023 every submarket experienced an increase in vacant units, less units under construction, and a declining average sale price per unit quarter over quarter.
