Multifamily Investments in Southern California
With the economic recovery entering its fourth year, some real estate investors are starting to wonder if the sector is starting to run out of gas. This concern is especially strong in the case of multifamily buildings; in some cities, rental prices have either ceased climbing or have even fallen slightly.
But despite the significant increase in supply and slowdown in rent increases in some markets, overall growth has remained strong (particularly on the West Coast) and is expected to continue to do so throughout the coming year. Demand will continue to climb in attractive markets like Southern California, as millennials age and begin looking for more, and better, housing.
Multifamily assets also benefit from space constrictions in places like San Diego, which saw a major decline in single-family housing demand following the 2008 financial crisis. That trend has only continued over the past decade, with homebuyers favoring smaller properties and municipalities offering more permits to multifamily properties than single family ones.
While 2017 is expected to exhibit more uncertainty than previous years due to a turbulent economic and political climate, demand fundamentals in San Diego, Orange County, Los Angeles, and other Southern California markets remain strong. The area continues to enjoy above-average employment and population growth, which will drive demand for multifamily properties throughout the year.
Although the multifamily sector has witnessed record growth over the past several years, Southern California and other high-demand markets likely have a ways to go yet before they reach their peak. Experts remain bullish on the sector, so expect to see continued growth and investing over the next year.