In an article in the Los Angeles Times January 23, 2016 the story stated that the state has posted huge job gains. It went on to say that 60,400 jobs were added in December which was the largest single months gain in the last 3 years.
In the same paper it was noted that US home sales were the highest annual total since 2006. In addition it was noted that median prices were up 6.8% in 2015 over sales in 2014. So, how does that effect investment property values. The answer is in this second story where they said, “With available homes in short supply more would-be buyers are stuck renting.”
These facts lead us to the Los Angeles Business Journal’s January 18, 2016 story titled, “Multifamily Pickup Makes Splash In Long Beach”. The JB Matteson Inc. Company of San Mateo recently close escrow on a 129 unit property called Urban Village Apartments. The building is at 1081 Long Beach Blvd. well away from the downtown core that has seen so much development in recent years.
The interesting part of this story is the fact that this price is $325,000 per unit! According to the CoStar Group Inc. the average price for multifamily units in the past year downtown is $153,000.
So, what does this mean for investors today? I think it is obvious to all that the recession is over and we are in a recovery cycle. In past recovery cycles buyers have to pay a scarcity premium to be able to buy property because the inventories are low and this one will be no different. The premium that was just paid for this 129 unit should give all of us a fair warning on what is to come in the market. For those interested in data on how the South Bay and Long Beach have performed over the last 40+ years give Buckingham Investments a call and we will get you a copy of our historical studies.