Multifamily Housing Development Sentiment: Positive Outlook Across California
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.
