The Los Angeles Multi-family Market in 2022

[Ethan Hanes]

In a normal market, owners of multifamily properties typically consider selling for the following reasons: personal health or fatigue, political and economic uncertainty, government over-regulation, physical or functional obsolescence, changing neighborhoods (homelessness), vacancy problems, and in some cases the inability to raise or even collect back rents to help cover expenses. These are all valid reasons.

Today, the market is very uncertain due to multiple factors that are foreshadowing a possible drop in apartment values. In other words, we believe the multifamily market is beginning to drop substantially. The Fed’s interest rate hikes of 50 to 75 basis points, inflation at a 40-year high, the continuing war in Ukraine, deficit spending, and the current political situation are all signs that point to a possible upcoming fall in values, similar to the situation in the early ‘90s that lasted from July 1990 to December of 2000. Today, properties are selling at a cap rate of 2-3% and gross rent multipliers of 15 to 16 and above. How could they possibly get any higher? This plus JPMorgan Chase CEO Jamie Dimon is predicting an economic hurricane according to CNN Business June 2, 2022. Arthur Laffer, a former member of President Reagan’s Economic Policy Advisory Board, agrees there is a storm coming.

Now may very well be the best time to take advantage of your property’s current value. Why risk losing thousands or even millions of dollars in equity?

[Solicitation Removed by Moderators]

Ethan Hanes