The L.A. apartment market has witnessed notable improvements since the beginning of 2021 after experiencing the worst conditions in 2020 in over a decade. Vacancies have been trending down since peaking at the end of 2020 and are currently 3.4%. Demand has been particularly strong in recent quarters. Gains in the market have been broad-based, as almost every location in the metro has seen solid occupancy gains.

Los Angeles has lagged the nation with respect to rent growth since the onset of the pandemic. Rents recovered to pre-pandemic peaks in May 2021, whereas the nation achieved that milestone in January 2021. Asking rents are presently increasing at a robust pace but are still increasing at a more modest pace than most other major apartment markets nationally.

Los Angeles has seen elevated construction levels for years and still has a sizable pipeline, 29,000 units that need to be absorbed in the coming quarters. Current construction levels represent 2.9% over existing inventory. Development activity is concentrated in specific areas that are more receptive to additional density, like Downtown Los Angeles and Koreatown.

Recent transaction activity has been robust and demonstrates investors are active in L.A.'s apartment market and willing to stomach some of the highest pricing and lowest cap rates in the nation. Many of the major apartment properties that have recently sold involved public/private partnerships that acquired newer market-rate apartments to convert to communities restricted to middle-income renters.