“The four most dangerous words in investing are ‘this time it’s different.'” — Sir John Templeton

If you’ve been waiting for the Southern California market to “figure itself out” before you sell or buy, here’s something worth knowing: it already has — it’s just settled somewhere most owners haven’t fully adjusted to yet.

HERE IS THE PRESENT SITUATION Multifamily cap rates across Southern California have sat right around 5.6-5.7% for seven straight quarters now — the longest stretch of unchanged cap rates in 25 years. That’s not a dip or a spike. That’s our market telling us where it actually is.

IT’S NOT THE SAME EVERYWHERE IN SOCAL Location still matters enormously here. Westside LA submarkets are trading closer to 4.5%, Santa Monica ranges 4.25-6% depending on asset class, while higher-yield areas like South LA are pushing 7.5%. If you own in one of our stronger submarkets, you’re likely sitting on more value than the general “market is soft” headlines suggest.

THE NATIONAL BACKDROP (BRIEFLY) For context: the Fed has held its benchmark rate at 3.50-3.75% since June, and that’s rippled into multifamily debt nationwide running 5.6-7.7% for stabilized assets. Rates dipped slightly in January and February, then jumped back after global events in late February. That’s the national weather — but here in SoCal, our submarket fundamentals matter more than the national headlines day to day.

WHAT THIS MEANS FOR YOU Sellers: seven quarters of stable local cap rates means buyers finally have confidence to underwrite Southern California deals — hesitation is fading, and institutional money is deploying again even at today’s pricing.

Buyers: financing costs aren’t going back to 2021 levels, but a local market that’s stopped moving is one you can actually plan around.

WHAT TO DO If you’ve been sitting on the sidelines waiting for “certainty,” this is about as certain as our market gets right now. Whether that means it’s time to sell, refinance, or go shopping depends entirely on your building, your submarket, and your goals — which is exactly the kind of conversation worth having before you decide.

We’ll keep you posted as this develops.

“Someone’s sitting in the shade today because someone planted a tree a long time ago.” — Warren Buffett

What we at PRS PROPERTIES CAN DO. We can give you a good idea of the current value of your building. We can suggest changes you might want to make before sale to give you an idea what type of building you would be able to exchange into. You may decide to stay in the rental business or you may want to move into a more passive real estate investment, such as a triple net or a DSL. We are always available to chat. We can give you referrals for professionals, such as lenders, contractors, and engineers, so that you can decide who you feel best with. We can supply you with rent and sale comparable in the area of your properties, so that you know what rental values are in your area. It is important that you know the true value of your rental units, so that you can get them rented right away at market value, or at least as much as possible with rent control restrictions. We can look at potential purchases that you may be interested in to make the property more desirable, and maybe look at potential issues that an insurer might require you to repair.

If you should decide to sell your building, we can help you exchange into a larger or smaller properties. We can even help you move into something with less management responsibilities. We can also help with getting the paperwork together for a refinance if that is your desire. We can also recommend experienced licensed contractors who can perform any repairs or installations you may need prior to selling. We can also look at your building for other easy and inexpensive changes that might allow you to get a higher value. 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 are currently looking for “as-is” properties and are willing to purchase with low rents, deferred maintenance or even with a problem tenant in place. We can offer a 7 day escrow and all cash at closing. Give us a call. We have also put together numerous transactions over the years which involve properties that are not listed for sale. Many investors are currently 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 45 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.