2024 Allen Matkins Survey | Key Takeaways
Increased Optimism in Key Regions:
- Sentiment indexes for multifamily housing development have reached their highest levels in the last two years.
- Notable optimism is seen in San Francisco, Silicon Valley, East Bay, Los Angeles, Orange County, San Diego, Sacramento/San Joaquin, and the Inland Empire.
- Los Angeles, Orange County, and San Diego, in particular, have shifted from neutral to optimistic outlooks.
Development Plans and Financing:
- While new multifamily development plans have slightly decreased from Summer 2023, they show an increase compared to Winter 2024.
- Expectations for higher equity requirements and investment return thresholds have marginally decreased.
Rental and Vacancy Rate Projections:
- Rental rates for multifamily units are anticipated to rise across California over the next three years.
- Vacancy rates are expected to decline in all regions except for Sacramento/San Joaquin, where they are projected to remain stable.
Economic and Market Context:
- The survey reflects an economic environment where GDP growth surged to 5.1%, and commercial real estate development saw expansion.
- Despite concerns about rising financing costs, the multifamily housing market remains robust.
- Significant new developments in multifamily housing are likely to begin in 2025 and 2026.
Summary for Investors: The multifamily housing market in California shows a strong, optimistic outlook, especially in major regions like Los Angeles and Orange County. While financing costs are a concern, the market is expected to remain robust, with rental rates climbing and vacancy rates decreasing.
