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Here's What's Happening In The Market, Here’s What This Means For You
Multifamily Lending to Hit Record $493B in 2022
There was an impressive 79 percent year-over-year jump in originations in fourth-quarter 2021, completing what MBA estimates was a total volume of $900 billion for the year. 2022 is forecast to be even higher.
Total mortgage borrowing and lending is expected to break $1 trillion for the first time, a 13 percent increase from 2021’s estimated volume of $900 billion. This is according to MBA’s new forecast released last month.
Multifamily lending alone is forecast to rise to $493 billion in 2022–a new record and a 5 percent increase that surpasses last year’s record total of $470 billion. MBA anticipates borrowing and lending to remain high in 2023, with slightly more than $1.0 trillion of total commercial real estate lending and $474 billion in multifamily lending.
The Pulse of the Market
- Vacancy declined 30 basis points during 2021 to 3.4 percent, reaching its lowest figure in the market since early 2017. The rate held steady in the fourth quarter. Local asking rents are expected to continue to rise throughout the rest of 2022, although the pace of growth is expected to slow following recent spikes. Average rents in Orange County are forecast to increase 6 percent in 2022.
- Cap rates in Orange County remain low. Nearly every property that sold recently transacted with a cap rate below 3.5 percent.
- Multifamily investors in Southern California regained confidence in recent quarters after unprecedented rent growth and a tightening vacancy rate. As the local economy continues to gain momentum and reaches a full recovery, Southern California will remain an increasingly attractive and stable market for investors.
- Cap rates in the market are typically among the lowest in the country. With inflation rising, investors may look at adding to real estate portfolios as a natural hedge against rising costs.
- Multifamily sales activity spiked in the second half of 2021 as the market reached new highs for transaction volume. Prices pushed higher, reaching $384,700 per unit through the end of 2021.
Orange County
Orange County multifamily sales have had strong weeks of sales recently with typical weeks of sales numbering around 15 or more. There were 17 Closed Sales Last Week. The Closed Sales - Average Days on Market was in the normal range at 36 days. There were 7 Transactions Sold At or Above Asking Price. Of the 17 Closed Sales Last Week there were 7 All Cash Transactions Last Week. The monthly Absorption Rate declined further last month and is now down to just 1.27 months.
Looking at the monthly charts for Orange County. The Average Days to Sell was up slightly to 39 days and has seen an increase over the last 2 months. The Number of Active Listings continues to decline as is at an all-time low. The Number of New Listings has increased overall, over the last 4 months. To show how strong the market is – even though the total Number of Active Listings has decreased to its lowest level ever, the Total Number of Sales increased. So even with low inventory, there are still quite a few transactions occurring.
Looking at the listing inventory for last week there were 10 New Listings Last Week. This has been about the average for weekly new listings lately. There were 85 Total Active Listings last week. This is down from 91 total listings in the prior 2 weeks. The Months of Inventory went from 3 months previously to 2 months currently. The Active Listings, Dollar Volume dropped below $400,000,000 which is the lowest this stat has been in almost 4 years.
List of Closed Sales
Southern California
Long Beach multifamily had 7 Closed Sales Last Week. This stat has been bumping up and down between 4-8 closed sales per week for the last few weeks. So this is about average for closed sales for Long Beach. The Closed Sales - Average Days on Market was elevated at 54 days. More than half, or 4 of the 7 Closed Sales Last Week were Transactions Sold At or Above Asking Price. There was just 1 All Cash Transaction Last Week. The monthly Absorption Rate decreased from 2 months previously to 1.79 months currently.
Taking a look at the monthly stat charts. The Days to Sell Average was up to 45 days. This is after being at the second-lowest rate ever in the previous month. The Number of Active Listings is now at the lowest point ever at just 120 listings. The Number of New Listings kept in line with the previous 2 months with 45 new listings last month. The Number of Sales for last month was up slightly and still about the same level it’s been for the last 5-6 months.
The listings inventory for Long Beach had 8 New Listings Last Week. This stat has been between 4-10 new listings each week for the past few weeks. The Months of Inventory remained at 4 months. The Total Number of Active Listings was at 61 listings. This stat has been seen a minimal increase over the last 4 weeks.
List of Closed Sales