Introduction

The Los Angeles multifamily market in 2024 is undergoing a significant shift. As rising debt costs keep institutional investors cautious, private buyers are seizing opportunities in one of America's most competitive real estate markets. According to recent data, the landscape has fundamentally changed, and understanding these trends is critical for anyone investing in LA multifamily properties.

LA Multifamily Sales Hit $1.6B in Q3 2024: But It's Still Below Historical Averages

According to a CoStar report from November 2024, Los Angeles multifamily sales reached $1.6 billion in Q3 2024, up from $1.2 billion in Q2. While this represents quarter-over-quarter growth, it remains significantly below the $2.2 billion quarterly average seen over the past decade.

This slowdown reflects broader market conditions: elevated interest rates, increased debt costs, and investor uncertainty about future rent growth have all contributed to a more cautious approach to multifamily acquisitions in Los Angeles.

Private Buyers Now Control 75% of LA Multifamily Transactions

One of the most striking trends in the 2024 Los Angeles multifamily market is the dominance of private buyers. These investors now account for 75% of all sales over the past year, up from their historical two-thirds share.

Why are private buyers winning?

• They have regional expertise and local market knowledge

• They're more flexible on deal structures and timelines

• They can move quickly without institutional approval processes

• They're identifying "diamond in the rough" properties others overlook

Real-World Example: In September 2024, a private buyer acquired the Lofts at NoHo Commons (292 units) for $92.5 million. This was $10 million below its 2016 asking price of $102.5 million. This demonstrates how savvy private investors are capitalizing on a down market to acquire quality assets at discounted valuations.

Institutional Buyers and REITs Step Back from LA Multifamily Market

Meanwhile, institutional buyers, private equity firms, and REITs have significantly reduced their activity in the Los Angeles multifamily sector. Over the past year, these larger investors accounted for only 20% of acquisitions, down from nearly 30% historically.

What's driving institutional pullback?

1. LA Mansion Tax (Measure ULA): Unintended consequences of this tax have made larger acquisitions less attractive

2. Prop. 33 Concerns: Investor fears over potential rent control expansion are creating uncertainty

3. Return Requirements: Institutional investors need higher projected returns to justify the increased risk in today's environment

For institutional capital, the risk-reward equation simply doesn't work right now. This has created a unique opportunity for local and regional private buyers with capital and expertise.

What's Next for the LA Multifamily Market in 2024 and Beyond?

The outlook for Los Angeles's multifamily sector remains uncertain. Elevated interest rates and debt costs may continue to sideline buyers in the near term. However, if interest rates ease as projected by economists, and rent growth resumes, we could see institutional investor confidence return to the market.

Key factors to watch:

• Federal Reserve interest rate decisions

• LA rental market absorption and rent growth trends

• Changes to local tax and regulatory policies

• Institutional investor sentiment shifts

The Bottom Line: Understanding the 2024 LA Multifamily Market

The Los Angeles multifamily market in 2024 is a tale of two investor classes. While institutional capital retreats, private buyers with regional expertise and available capital are finding exceptional opportunities. Whether you're a seasoned investor or exploring multifamily acquisitions in LA, understanding these market dynamics is essential to making informed decisions.

The Kenny Stevens Team stays on top of these trends so you don't have to. Contact us to discuss how current market conditions might impact your real estate strategy.