California’s Multi-Family Construction Decline, Covid, and Recent Construction Projects
California has long faced housing shortages and already seemingly outrageous rental rates that only continue to rise. The continued decline of multi-family properties is sure to increase the trend of rising rentals. Not only has California faced a shortage of rental units, but recent decreases in availability of single-family homes will only increase the demand for rental properties. According to Zillow, since March 1st of this year, new listings have declined drastically, lowering 38% in San Francisco, 19% in Los Angeles, and 10% in Riverside.
Since 2010, the highest producing city for multi-family units has been Irvine, CA. With over 86 units per 10,000 residents, growth has been steady in the area. Other high production areas have been Milpitas, with over 65 units per 10,000 residents, and Mountain View with over 54 units per 10,000 residents. Trends for multi-family properties have been on the decline over the last decade, and nearly every large city in the state has issued more permits for single-family units than those for multi-family.
In Lincoln, for example, over 1,000 housing units have been built since 201, but none of those have been multi-family units. In Elk Grove, over 4,500 permits for housing have been issued over the same timeframe; however, only about 9% of those have been multi-family.
What causes the shortages?
There are numerous factors contributing to the decline of residential multi-family construction. Local population growth can determine the rate of single-family homes versus apartment buildings, as can the availability of properties large enough to build larger apartment complexes or buildings. Even the local population can have an influence on multi-family construction, with home owning residents fighting against the construction of new apartment buildings, with the argument that multi-family properties will lower their single-family home values.
How does the Covid pandemic affect construction?
While the long-term effects of Covid and the anticipated coming economic downturn are unknown, the current effect on construction has been minimal. As of March 19, 2020, the state of California was placed under a “Stay at Home” order by the Director of the California Department of Public Health. The order makes exemptions for activity and business that is necessary to continue operation of “critical infrastructure sectors,” including government services, school and childcare, and construction — including housing construction.
Top-Selling Multi-Family Properties as of Q1 2020.
While there are many uncertainties for current homeowners and renters alike, there is no doubt that housing in California will continue to be a hot commodity for investors who consider the area a relatively safe investment. Over the last several months, many properties have been successfully completed and sold. Below we’ve collected some of the top sales:
717 Olympic. On West Olympic Boulevard, the 717 Olympic complex was sold for $55.1 million.
Pico Lanai Apartments. Sold for $58.6 million, the Pico Lanai Apartments on Pico Boulevard are home to 174 units.
Harborside Marina Bay Apartments. Featuring 205 units in Marina del Rey on Tahiti Way, the Harborside Marina Bay Apartments sold for $86 million.
The Preston Miracle Mile. Located on Masselin Avenue in Los Angeles, the 169-unit complex was sold for $86.8 million.
1600 Vine Apartments. With 283 units, the 1600 Vine Street complex was sold for $112.2 million.
Wakaba. With 240 units located in Little Tokyo, Wakaba on East 2nd Street sold for $115.8 million.
The Griffith. Located in Glendale on West Los Feliz Road, The Griffith features 220 units and was sold for $118.5 million.
The Weddington. This North Hollywood mid-rise featuring 329 units was purchased for $169.2 million.
The Pearl on Wilshire. With 346 units, mid-rise The Pearl on Hobart Boulevard was sold for $170.9 million.
Sofia Los Angeles. Located off West 6th Street, the Sofia Los Angeles multi-family building houses 606 units, and was sold for $272.5 million.
For Los Angeles Property Management Contact Utopia Management today by calling us at (800) 294-4656 or click here to connect with us online.