Q4 2024 Los Angeles Multifamily Market Report

Los Angeles Key Findings

• The Los Angeles multifamily higher-tier segment made up the most absorption activity throughout 2024, with renters taking up 7,100 units. The Downtown Los Angeles, Koreatown, and San Gabriel Valley submarkets accounted for the highest absorption levels.
• With sustained rental activity, Los Angeles has been able to maintain a low vacancy rate since 2023, averaging around 4.9%. It recorded a vacancy rate of 5.0% at the end of 2024.
• As the metro adjusts to the ULA tax, which is a tax of 4% for transactions over $5 million and 5.5% for sales over $10 million, private buyers have increased their presence in Los Angeles. Private investors accounted for 75% of sales in 2024.

By the Numbers

2024 | *represents change from Q3 2024 | Source: CoStar Group

• Sales Volume: $5.8B ↑
• Average Sale Price per Unit: $356K =
• Cap Rate: 4.9% =
• Vacancy Rate: 5.0% =
• Rent Growth: 0.9% ↑
• Average Market Asking Rent per Unit: $2.3K ↓
• Units Under Construction: 21K ↓
• Unit Delivered: 2.2K ↓
• Units Absorbed: 2K ↓

Los Angeles Demographics

• Unemployment Rate: 5.9%
• Current Population: 9,682,066
• Households: 3,464,002
• Median Household Income: $89,138

The Los Angeles metro’s population declined by 3.3% over the past five years. Its slowdown can be attributed to residents leaving because of the high cost of living. However, Los Angeles still boasts a variety of employment opportunities in the entertainment, tourism, and financial activity segments. The metro is also beginning to see a recovery in its tourism levels, but international tourism has yet to meet its historical activity.

Market Performance

The multifamily segment in Los Angeles recorded stable performance in 2024, due to supply and demand remaining in balance since 2022. As rental activity cooled down with residents leaving the metro, rent growth remained around 1.0% year-over-year. Submarkets in South Los Angeles and the North San Fernando Valley recorded the most rent growth at 2.3% year-over-year.

Despite sustained rental activity, the wildfires from early January resulted in the loss of around 7,000 units in the Pacific Palisades and Altadena submarkets. Single-family homes were also destroyed as a result. With many homeowners and renters recovering from the natural disaster, rent is likely to increase throughout 2025. Current forecasts predict rent to increase by 8%-12% due to the destruction.

Construction

Throughout 2024, apartments in Los Angeles saw an increase of 8,600 units. Developers have begun setting their sights on Downtown Los Angeles, Koreatown, and Hollywood as these areas record high population growth. Koreatown, specifically, saw the greatest increase with its inventory increasing by 1,700 new units during 2024.

Sales Velocity

Sales declined to $1.9 billion in Q4 2024, due to the recent ULA property tax in Los Angeles and higher debt costs. Transaction activity was strongest in the metro’s northern submarkets, where rent is historically lower than other areas.