It has been almost five months since the executive order to stay home was advised to Californians (due to Covid-19). During that time, the stock market took a downturn of approximately 36%, but also crept back up near an all-time high. The 10-year treasury reached its lowest point ever and now has jumped up – hovering slightly below 1.00%. There was a brief pause in home purchasing, but with mortgage rates being as low as they are, there is a bidding frenzy that is causing houses to sell above the list price in certain cases.

Things may seem optimistic and rosy in the single family home sector, but retail has been hit the hardest during this difficult time. An immediate recovery does not seem plausible since California had an upswing in Covid-19 cases which forced businesses to shut down again. While we have briefly discussed the impact of Covid-19 in the single-family home & retail industry, we want to dive into the multifamily market a little more in detail.

How Has the Apartment Industry Performed Compared to SFH & Retail?

We have received mixed reviews from apartment owners. Some owners in Class B & C submarkets have seen extraordinarily little change in rental income because the tenants may be paying below market rents in these buildings. However, in Class A buildings that are of new construction and not subject to rent control, we are seeing close to 30% non-payment/vacancies. What is most troubling is that owners are unable to rent out their units currently.

This can be attributed to multiple factors:

• (1) Massive job loss which impacts tenant income; therefore, affecting the ability to pay rent
• (2) Eviction moratorium incentives for tenants to stay put and not pay rent
• (3) New construction properties offering huge concessions and discounted rents to fill vacancies.

Although the macro picture looks somewhat gloomy, our team has been able to weather the storm and thrive during these unprecedented times. In the past five months, our team has signed seven (7) exclusive listings & closed escrow on six (6) properties. As we speak, we are in escrow for another five (5) apartment buildings and hope to continue to use this momentum towards the end of the year.

Despite the news out there, our boots on the ground intel demonstrates there are still investors looking to sell & buy in this market.