In 2023, the Los Angeles multifamily real estate scene was predominantly influenced by private buyers, who remarkably represented 90% of the market’s dollar volume, showcasing a significant shift in the dynamics of property transactions. This proportion of private buyer dominance was the highest observed in recent decades, indicating a strong and growing preference for multifamily investments among individual and small-scale investors.
During the decade before the COVID-19 pandemic, from 2010 to 2019, private buyers consistently played a major role in the market, but their average contribution was around 70%. The leap to 90% in 2023 signifies a notable increase in their market share, suggesting that private buyers have become increasingly active and influential in shaping the Los Angeles multifamily market.
This surge in private investment comes in stark contrast to the participation of institutional buyers, who accounted for a mere 3% of the transaction volume in 2023. This is a significant decrease from their previous average of 12% between 2010 and 2019. The decline in institutional investment could be attributed to various market factors, including the economic impacts of recent years and possibly the introduction of new tax regulations affecting larger transactions.
The dominant presence of private buyers in the market suggests a robust interest in multifamily properties among these investors, potentially driven by factors such as the search for stable rental income, long-term asset appreciation, and the perceived safety of real estate investment in a volatile economic environment. Their increased activity also reflects a market shift where individual and smaller-scale investors are taking advantage of opportunities that were traditionally the domain of larger institutional players.
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Source Name: Costar
