Q4 2024 LA County Multifamily Sales Report
Investor Interest in West LA Apartments Reaches Annual High in Q4
West LA area apartments have shown improved deal flow relative to the national average, with 73% more dollar volume targeting multifamily assets here in 2H 2024 than in 2H 2023. For yearlong totals, all West LA’s zip codes trail the 2023 transaction tally. This is driven by a disproportionate volume of activity in 1Q 2023, prior to the ULA Mansion Tax taking effect. This 2H increase has the support of property performance expectations, with vacancy in the area holding between 7% and 7.5%, while forecasts expect annual rent growth to rise to +3.7% by the end of 2025. Annual Absorption is down in 2024 by roughly 50%, but a lack of new units is largely responsible for the low tally, rather than diminished demand to live in the area.
Renters in the area are showing the effects of inflation and higher borrowing costs. Prior to the pandemic, units with 3 bedrooms recorded the highest vacancy in the area. With stimulus payments dried up and excess savings eliminated by inflation, West LA renters have bundled households to save money on housing. Three-Bedroom Units and Studio units now are the lowest vacancy units in West LA.
Average pricing in the metro has been affected greatly by higher lending costs. Since peaking in 2022, per unit pricing has dropped nearly 20%. Recent trends suggest 1Q 2025 could mark the first quarterly increase in average pricing in over 2 years. Similarly, cap rates have elevated 110 basis points since 2022, reaching the highest level in almost a decade in West LA. Like pricing, recent movement hints that cap rate climbs are ending. The average cap rate in West LA could return to modest compression in 2025.
Pricing trends show a similar 20% per unit decrease across West LA’s zip codes. Part of this is the direct effect of higher borrowing costs. However, the city’s tax policy is also diminishing valuations for properties priced over $5 million. Cap rates in the area are rising in proportion with the LA County total. In addition, data shows West LA average cap rates holding 3050 basis points below the countywide average.
Transaction volume is accelerated in some of West LA’s zip codes. On the other hand, others ended 2024 near modern lows for deal volume. The 90024 (Westwood) and 90049 (Brentwood) zip codes closed 2024 showing heightened/stable transaction activity. In contrast, volume fell or is near $0 to close the year in the 90025 (West LA), 90064 (I-10/I-405), 90067 (Avenue of the Stars), and 90073 zip codes.
Market Snapshot
- Sales Volume: $225M
- Sale Price per Unit: $517,000
- Annual Net Absorption: 237 | 2024 | Source: CoStar Group
