Laura Coleman The Los Angeles multifamily-housing market this year, much like last year, will be home to a housing shortage, rising rents and diminishing affordability, with rising interest rates as an added bonus. Nevertheless, analysts expect the market to remain strong, if not frothy, throughout this year, riding the momentum of frenetic multifamily-housing activity in recent years. Low interest rates, a glut of eager home buyers and creative developments made Los Angeles a multifamily-housing Mecca the last few years for investors. But with the Federal Reserve Board's decision to raise interest rates to 2.5 percent, which many predict will continue at a slight incline, affordability may shift and the industry will feel the ripple. Economist Dolores Conway, director of the Casden Forecast for the USC Lusk Center for Real Estate, said, "Prices are slowing in terms of their appreciation. [Mulitfamily] doesn't appear to be over-valued in view of the investment activity in Southern California."
February 14, 2005