In the weeks since the Coronavirus Pandemic has changed daily life in our communities, economy, and market we’ve heard from many of our clients. In this rapidly changing environment, the most pressing question has been “What’s going on in the market?” Experts across the real estate investment community have been speculating on the trajectory of real estate markets in every asset class. Predictions range across a wide spectrum from dire to nonchalant.
Although we can’t claim to know the future, our experience has taught us the best hedge against uncertainty is data. We’ll leave the national economic forecasting and analysis to the economists. There is precious little quality local level timely data on our own real estate market. To that end, we’ve started releasing our market studies on a monthly basis rather than our usual quarterly intervals.
May 2020 Update:
Below is a sampling of some trend charts illustrating income metrics, pricing, volume, and inventory numbers right here in our local South Bay Los Angeles multi-family market. Monthly metrics are shown beginning in January of 2020. When we began tracking this data monthly in March, we expected January through February (and maybe March) to present a base case, after which the effects of the pandemic would be clearly visible in our local data. Much to our surprise, April didn’t result in any shocking numbers. Sales volume, cap rates, and price per unit were all in normal ranges. We thought certainly May will begin to illustrate cracks in the market as the stay at home order extended past 2 months. Well, May numbers are in and they are surprisingly unremarkable. Income and value metrics were once again within a normal range. They closely relate to what we saw in February of this year prior to the pandemic’s arrival in the U.S. The only notable change was sales volume. As expected, the number of transactions took a dive. Many market participants have been employing a wait-and-see approach in the anticipation of major changes. So far, the wait continues. Inventory, often a leading indicator, has not significantly risen.
We will continue to update these charts on a monthly basis and release the results as soon as we have the available. We hope everyone is safe and healthy.
All Market Trends and Market Studies can be downloaded from: “PLANNING AND RESOURCES”
