Is The Current Demand Sustainable?

IS CURRENT DEMAND SUSTAINABLE? 
With vacancy rates under 3.5% in Los Angeles and surrounding counties, it will require a lot of new projects to be built in order to satisfy current demand. Multi-family construction is up over 20% since the beginning of the year, but there are many renters looking for apartments and finding more competition than they have previously seen. Prospective tenants are having a difficult time convincing property owners that they are the best choice. There are even bidding wars. As construction comes closer to meeting demand, less desirable buildings will once again have to compete for tenants with newer and more modern properties.

HOW ABOUT RENT GROWTH? 
Currently, we are seeing substantial growth in rental prices all over Southern California. This is in spite of statewide rent control (AB 1482) and even more restrictive local ordinances in locations such as the City of Los Angeles and West Hollywood. There are also moratoriums in places like Los Angeles City and County (unincorporated areas). Some owners are offering tenants “cash for keys” to get a unit vacant or doing major rehabs on their units. All of this can be quite expensive, but with rising values, many are doing what they feel they must.

HOW MUCH IS AFFORDABLE? 
The levels of affordability will be a major factor in the growth of rents. With housing affordability lessened because of higher home prices coupled with a substantial rise in interest rates, many would-be home buyers are continuing to rent. At the end of the day, prospective tenants have to allocate a larger portion of their income to housing or settle for a smaller unit. This situation is not sustainable but we have yet to see how far it will go.

What we at PRS PROPERTIES CAN DO. We can discuss with you the current rents in your area and supply you with comparable rental prices for similar properties. Before you hire a manager, make sure the compensation is fair to you! We can also look at your building for changes that might allow you to get a higher value in order to create value without huge expenses for your building. We can help you to get the maximum value for your property, should you decide to sell, or the maximum return if you are planning to keep your building.

We always have many investors who are looking for “as-is” properties and are willing to purchase with low rents, a moratorium, or even with a problem tenant in place. We have put together numerous transactions over the years which involve properties that are not listed for sale. Many investors are in 1031 exchanges and need to identify a replacement property before their 45-day identification period runs out.

Should you decide to put your property on the market, we will put together an aggressive, targeted, and professional campaign to get your property sold fast. We have been doing this for over 40 years, and we will use all the tools available to bring you the most dollars at closing. If you are thinking of selling or are just curious about the value of your property, don’t hesitate to give us a call.

Remember – KNOWLEDGE IS POWER!