As the current economic cycle stretches past most initial expectations, the multifamily market continues to test its limits. Los Angeles’ rental market remained strong through 2019’s last quarter, despite several economic and demographic headwinds, as investors and developers continued to pour their resources into the market and seek significant cash flows at the price of compressed acquisition yields.
The market’s employment gains have bounced back to 1.2 percent year-over-year as of September, following a lengthy sub-1.0 percent interval during the year’s first half. Education and health services continued to be L.A.’s economic cornerstone, having gained some 30,000 jobs in the 12 months ending in September. While the public sector was down 15,500 jobs and trade, transportation and utilities stagnated, long-term initiatives such as the prospect of the 2028 Olympic Games and the city’s Green New Deal plan offer significant job growth potential in the long run.
Investment has stayed strong across the metro, with $3.4 billion in assets trading through the year’s first 10 months. Although three-quarters of deals were for Renter-by-Necessity properties, the average per-unit price was $340,400, showcasing the market’s enduring appeal.