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Multifamily Sales Activity in the City of Los Angeles Increased in the Fourth Quarter

While an Improvement From Midyear, Activity Remains Well Below Pre-Pandemic Activity

Multifamily Sales Activity

By Ryan Patap

CoStar Analytics

January 9, 2024 | 10:43 AM


After a Los Angeles transfer tax on commercial and residential properties selling for $5 million or more triggered record-low sales activity, multifamily sales activity in Los Angeles’ city limits picked up in the fourth quarter of 2023.


In total, 136 properties worth just over $556 million transacted during the fourth quarter, with activity hitting 50% and 45% above second and third-quarter dollar volumes, respectively. Of the properties that traded in L.A., 17 closed with a sale price above $5 million, above the seven and nine properties that sold in the second and third quarters, respectively.


While there has been more sales activity and more buyers reentering the market, levels remain well below what is seen historically. On average, $1.5 billion worth of quarterly trades were recorded in the city during 2021 and 2022. From 2015 through 2019, the five years preceding the COVID-19 pandemic, activity averaged around $1.2 billion in trades.


Recent activity in the rest of Los Angeles County contrasts with activity inside the city limits. Transaction volumes in the fourth quarter of 2023 were slightly above first-quarter levels. During the first quarter, the city of Los Angeles saw just over 60% of all multifamily sales activity on a dollar basis in Los Angeles County. However, the city saw around 45% of dollar activity in Los Angeles County in the fourth quarter.


The transfer tax — which the city implemented on April 1 — has clearly impacted capital placement within the L.A. metropolitan area. Historically, the city of Los Angeles saw a higher percentage of multifamily sales on a dollar basis in the greater metropolitan area. During the past 10 years before the second quarter, the city saw 53% of all apartment dollar volumes in Los Angeles County.

Activity will likely remain restrained in the city in the coming quarters due to legal challenges and a statewide ballot initiative in November 2024 called the Taxpayer Protection and Government Accountability Act. If passed, the legislation would end the mansion tax in Los Angeles, so investors may wait to see the final fate of the transfer tax before deciding to buy or sell.

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