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Rising home prices puts more pressure on multifamily supply

  • ​The median home value in Los Angeles has increased 42 percent since 2008 from $427,400  to $674,600.  Rising home prices has meant more people are unable to buy. Current home ownership rate is 51.9 percent, well below the US average of 64.2 percent. As in many large cities, people are delaying having families. Furthermore, a preference for urban living near transit lines is halting the expansion into more affordable suburbs.

  • All these factors are driving the demand for multifamily dwellings. Vacancy is currently at a historic low of 4.5 percent, down  from 5.7 percent just a year ago. To the alleviate the shortage of rental units, developers have stepped into high gear with 33,000 multifamily units under construction. Give that living expenses are increasing more rapidly than wage growth and that home affordability continues to decrease, apartment fundamentals are likely to strengthen even more.

Source: JLL Research

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