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Here's What's Happening In The Market, Here’s What This Means For You
2022 Could Be When Apartment Demand Finally Cools
Lower-waged job growth, the end of “bargain” rents, and
build-to-rent single-family homes could have a big impact.
Apartment demand has soared the past year and is still flourishing. But RealPage chief economist Greg Willett points to several factors that could cool apartment performance next year.
RealPage analysts are anticipating that near-term demand for US apartments will remain well above the historical norm. However, it seems likely that the product absorption volume will ease to some degree from 2021’s high level. Several factors point in that direction.
First, most economists expect that many of the country’s near-term job additions will occur in industries where wages tend to be low or moderate. That growth pattern runs counter to what was seen over the past year or so, as recovery from Spring 2020’s mass layoffs registered more quickly in high-paying industry segments like professional services and the tech sector.
The addition of lower-paying jobs doesn’t fuel new household formation to the degree seen when expansion is led by the creation of jobs that pay well.
Second, with bargain rents now mostly in the rearview mirror in gateway metros, the demand comeback in these areas could slow. The youngest renters have played an especially big role in apartment leasing activity in gateway metros during 2021, with reduced prices spurring demand from households who previously couldn’t afford living in these locations unless they teamed up into multiple roommate households.
At this point, rents are roughly at or meaningfully above pre-pandemic prices everywhere except the San Francisco Bay Area.
Third, build-to-rent single-family homes could drain off some demand from apartments in the Sun Belt. While build-to-rent single-family home subdivisions form only a very small portion of the total rental stock now, quite a few of these communities are under construction now, mostly in Sun Belt locations where exurban land prices are low enough to make this product work financially.
Orange County
Orange County multifamily had 15 Closed Sales Last Week. This is identical to the prior week's number of closed sales and is considered an average week of closed sales for Orange County. Closed Sales - Average Days on Market remained strong at just 28 days.
The Orange County SALE OF THE WEEK was two 4 plex’s located on Claudina St. in Anaheim. Located near Disneyland. These two 4 plex’s were owned by the same owner but located on opposite sides of the street. Both sold for approx. $100,000 under the initial asking price and were on the market for 7 days. All the units were 2 bedroom 1 bath. The rents were considerably under market. There was approx. 50-65% upside in the existing rents. The exterior of both properties looks a little rough based on the photos but they are located in a strong rental area of Anaheim.
Orange County multifamily listing inventory had 12 New Listings Last Week. This is after there were 21 new listings in the prior week. The Total Number of Active Listings was down from the prior week to 128 total listings but still maintained the average number of listings for the past few weeks/months. Were not seeing a drop in listing inventory typical for this time of the year.
List of Closed Sales
Live MLS Link PDF Link SALE OF THE WEEK
Southern California
Long Beach multifamily had 10 Closed Sales Last Week. The is up just slightly from the prior week when there were 9 closed sales and is average for the weekly number of Long Beach sales. The Closed Sales - Average Days on Market was just 22 days. Another week of strong demand and quick turnaround times from listing of a property to an accepted offer. Half (5) of the closed sales were Transactions Sold At or Above Asking Price.
The Long Beach SALE OF THE WEEK was a 9 unit building located on Bennett Ave. The property was listed at $2,500,000 and sold for $2,580,650 in 4 days. The property is composed of one 2 bedroom 1 bath unit and eight 1 bedroom 1 bath units. The property was built in 1947 and is located only a few blocks from the beach. The property included 4 enclosed garages. The property recently had $50,000 of improvements. The exterior improvements included a new roof, wood trim, replaced eaves, paint, and windows. The interior improvements included a recently renovated unit with new floors, paint, and bathroom upgrades. The property sold at $551 per sq. ft. the average price per sq. ft. in Long Beach is $494. But this property was located in the Belmont Shore area of Long Beach which typically has a higher price per sq. ft.
Long Beach listing inventory had 11 New Listings Last Week. This is an average number of weekly new listings for Long Beach. The Total Number of Active Listings was up slightly from the prior week of 85 total listings to 88 Total Number of Active Listings.
List of Closed Sales
Live MLS Link PDF Link SALE OF THE WEEK