OC Apartment Brokers
SoCal Multifamily Sales Pulse - April 26, 2021 - May 2, 2021
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Here's What's Happening In The Market, Here’s What This Means For You
CRE Doesn’t Have to Worry About Inflation Yet
While there are widespread concerns about inflation, so far, the rise in interest rates has been because of better growth prospects, according to Cushman & Wakefield. Those positive dynamics also mean good things for real estate fundamentals.
Right now, the market is indicating that “unanchored inflation” is unlikely, according to Cushman & Wakefield. It says low interest combined with transparency from The Federal Open Market Committee justifies the valuation of interest-rate sensitive assets.
Despite the pandemic, there has been little movement in headline cap rates since December 2019. Across product types, cap rate spreads are elevated above the long-term average by about 100 basis points. “This indicates an ability to absorb upward movement in the cost of capital without imminent pricing downsides,” according to C&W.
Even if inflation isn’t a concern yet, supply chain and construction costs are rising. That means higher build-out costs for occupiers and higher budgets for inputs for developers, according to C&W. Still, C&W says the cost of financing will be supported by accommodative monetary policy.
Orange County
Orange County multifamily Closed Sales Last Week was up again last week with 18 total closed Sales. Orange County multifamily's Absorption Rate increased slightly from last month to 2.12 months, but it's still extremely low with Average Days on Market at just 38 days. The monthly Average Days on Market dropped to just 33 days. If your property hasn't sold in 30 days or less it means it's probably overpriced. The Monthly Average Cap Rate and Average Gross Multiplier were unchanged from last month. Months of Inventory increased to 3 months while Total Number of Active Listings dropped to 138 listings.
List of Closed Sales
Southern California
Long Beach multifamily sales stayed about average last week with 10 Closed Sales. Closed Sales - Average Days on Market increased to 80 days while the Absorption Rate went from 2.12 months last month to 2.2 months currently. The Monthly Average Cap Rate was unchanged and the Average Gross Multiplier was up slightly from last month to 14.21 times gross. The Total Number of Active Listings was consistent with 110 total listings but the Months of Inventory dropped from 4 months to 3 months.
List of Closed Sales