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Multifamily Sales Activity in Greater Los Angeles Remains Modest in the First Quarter

Sales City- and County-Wide Fell Well Below Recent Peak

Multifamily Sales Activity in Greater Los Angeles

CoStar Analytics

May 3, 2024 | 12:28 P.M.

In the first quarter, multifamily sales activity in Los Angeles County and Los Angeles’ city limits remained modest, signaling a restrained market as potential buyers consider how California's tax policy might change come November's elections.

Within L.A. city limits, around $550 million in properties traded in the first quarter. Activity was slightly below the around $580 million in sales in the last quarter of 2024 and just over one-third of the average quarterly levels seen in 2021 and 2022, the most recent period for peak activity in the sector.

The remainder of Los Angeles County saw $411 million in transactions, representing notable moderation from the around $750 million in transactions seen in the last quarter of 2023. These first-quarter measurements also comprised around one-quarter of the quarterly average activity in 2021 and 2022.

The region's largest first-quarter sale demonstrates pricing below what would have likely been achieved before the national rise in debt costs and Los Angeles’ enactment of additional transfer taxes. In March, national multifamily investor FPA Multifamily purchased 888 at Grand Hope Park, a 525-unit tower in downtown Los Angeles, from developer CIM Group for $186 million, or $354,000 per unit, an around 20% discount from the initial asking price of $236 million, or $450,000 per unit. The property also sold for 40% below the estimated replacement cost of around $600,000 per unit. CIM Group paid $11.1 million in transfer taxes.

Due to elevated financing costs, activity will likely remain restrained across Los Angeles County. Within city limits, we expect that transactions will be hampered in the near term due to legal challenges and a statewide ballot initiative in November 2024 called the Taxpayer Protection and Government Accountability Act, which, if passed, would end the mansion tax in Los Angeles and other similar measures. Investors may wait to see the final fate of the transfer tax before deciding whether to buy or sell.

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