Condo sales and prices in Los Angeles County have fallen off a cliff.
The number of units sold in L.A. County fell nearly 11 percent in the first quarter compared with the fourth quarter of last year, and was down 37.5 percent year-over-year, business observer reportReport quoted from Nami Capital.
Meanwhile, the average selling price per unit fell by 18.4%.
The multifamily rental market in Los Angeles County, home to 3.3 million people, has been hit by economic uncertainty, high inflation and rising borrowing costs.
The ULA measure “Mansion Tax,” effective April 1, is expected to further deter multifamily transactions. The new law imposes a 4 percent transfer tax on commercial real estate transactions over $5 million and a 5.5 percent transfer tax on transactions over $10 million.
Fed rate hike That further impacted economic conditions, limiting the amount of money tenants can use to buy multifamily housing and the financing available to developers and investors, according to the Observer.
“This shift in market conditions and demand for multifamily housing will affect future underwriting of new projects,” the NAI report said.
Apartment vacancies in the area have risen, but so have rents.
The apartment vacancy rate hit 4.2%, up 20 basis points sequentially and 70 basis points higher than last year, after states and counties lifted pandemic-era eviction protections.
Meanwhile, average rent rose to a record $2,156 per unit, up 1.9% year-over-year, with new complexes being the main driver.
For investors, the San Fernando and Santa Clarita Valleys saw the largest declines in average multifamily sales prices, down 35.9% year-over-year, while the number of vacant units rose 22%.
The San Gabriel Valley saw the largest increase in vacant units, up 32.2 percent, as the average price per unit sold fell 20.3 percent year-over-year.
The average unit sales price in West Los Angeles fell 9.5 percent, while the number of vacant units rose 10.7 percent.
— Dana Bartholomew
