The Los Angeles multifamily real estate market in 2023 experienced a significant shift, with the top property sale totaling $125 million—four times less than the leading deal in 2022, which reached an impressive $504 million. 

The year saw a challenging landscape, marked by a 19.4% decrease in the average sales price for residential units, as reported in a study by NAI Capital. The market’s bearish trend was largely attributed to the impact of soaring interest rates, according to Eric Sussman, a professor at the UCLA Ziman Center for Real Estate. 

Despite the challenges, notable transactions took place:

• Enclave at Warner Center Apartments | Canoga Park | $106.65 million | 195 residences | MG Properties sold to undisclosed buyer | Located at 6710 Variel Avenue

• Oxford Park | Los Angeles | $106.4 million | Senior housing community | Standard Communities bought from Goldrich Kest | Located at 1920 South Oxford Avenue

• Cathay Manor Apartments | Los Angeles | $97 million | 273-unit building | Capital Realty Group acquired from Chinese Committee on Aging Housing Corporation | Located at 600 North Broadway

• 3907-3943 Flower Drive | Los Angeles | $94.2 million | 32 units (Development) | Landmark Properties purchased from Ventus Group | Located in University Park campus for USC

• Providence Gardens Apartments | Long Beach | $75 million | 200-unit Section 8 senior housing development | Redwood Housing bought from Las Palmas Foundation | Located at 1011 Pine Avenue

• Portofino Townhomes | Wilmington | $67.5 million | 200-unit compound | Open Path Investments acquired from Virtu Investments | Located at 1625 Pacific Coast Highway

In a year marked by reduced activity and considerable uncertainty, Los Angeles’s underlying supply and demand dynamics remain fundamentally sound. The 4-year LA City Eviction Moratorium, which not only prohibited landlords from increasing rents during this period (with the original limit for RSO Units set at 4%) but also impeded eviction procedures for nonpaying tenants, officially concludes on February 1st, 2024. The speculative stability in rates throughout the year fosters optimism, providing investors with a clear indication of how to underwrite deals. 

Sources:

https://therealdeal.com/la/2024/01/05/top-multifamily-sale-prices-fall-during-2023-in-la-market/

https://finance.yahoo.com/news/traders-bet-fed-wont-start-181007627.html