Q4 2020 Multifamily Market Outlook – Los Angeles

The multifamily housing market continued to be restrained by the effects of an economy
that spent nine months of the year under a COVID-19 shutdown. Since the onset of
the pandemic’s forced closure of non-essential businesses in March 2020, thousands
of people lost their jobs. As layoffs skyrocketed, California’s Governor extended a
statewide eviction moratorium for renters affected by the coronavirus through June 30,
2021. Assistance was also extended to property owners who agreed to waive 20% of
unpaid rent. By agreeing to this waiver, property owners become eligible for 80% in rent
reimbursements for amounts owed between April 1, 2020 and March 31, 2021.

Multifamily housing, especially new construction, lost significant demand due to
job losses. Between April and December of 2020, a total of 10,108 units, mostly
unrented, were added to the market. The coronavirus pandemic recession hurt the
rental market, sending the vacancy rate to an all-time high of 6% in Q4 2020. Back
in the second quarter of 2009, vacancy remained at 5% for only two quarters before
declining. It’s unlikely that rent will roll back 19% to Great Recession levels. Average
rent fell 1.7% in Q4 2020 from last year to $1,900 per month.