SoCal Multifamily Sales Pulse - December 21, 2020 - December 27, 2020

Multifamily transaction activity has fallen sharply in 2020 due to the fallout from COVID-19. Through three quarters in 2020, $50.6 billion of multifamily property sales were completed in the U.S., down 41.7% from $86.5 billion through the same period a year ago, according to Yardi Matrix. There’s little hope full-year volume will get close to 2019’s record high of $127.8 billion.

Sales recovered in the third quarter after hitting a trough in 2Q20, but like so much about the economy, a return to “normal” transaction activity is hard to predict. Until the pandemic recedes and people can return to daily activities with the help of an effective vaccine, uncertainty will linger. Acquisition yields for apartments have barely budged throughout the year. Recent sales show some apartments are returning to pre-pandemic pricing.

Still, pricing depends, to some extent, on operations and location. Every property is a case-by-case situation, based on location as well as operations and rent collections. Properties with bad operations are not going to be able to get top dollar, but well-managed properties are still going to go out there and do well based on collections.

The broadest measure of business output shows how far the pandemic sunk California’s economy — what was one of the nation’s hottest business climates in 2019 suffered the seventh-weakest rebound this summer. In 2019, California GDP growth was topped by just four states. Considering how hard the pandemic has hit the state at year’s end, it’s a good bet that California’s economic underperformance will continue.