Long Beach Apartment Market Crash or Boom in 2021? Here’s an Analysis of What Real Estate Investors Can Expect

Despite a global pandemic, economic recession, high rates of unemployment, and an unpredictable year in 2020, the real estate apartment market thrived. But how is the real estate apartment market doing in 2021, and how will it trend towards the rest of the year?

Real estate investors in Long Beach and all over California are wondering whether 2021 is the year to buy, sell, hold, or refinance their properties. Are the historically-low interest rates going to stay the same or can we expect an increase?

However, out of all the worry, speculation, and conversations the biggest question investors have is this: Will the real estate market crash in 2021? Many analysts and investors fear an incoming crash due to a potential wave of foreclosures from apartment owners falling short on their mortgage payments because of unpaid rent by tenants who have been affected by the COVID-19 pandemic.

In order to answer these questions, first and foremost we need to look into the numbers and data before the pandemic in 2019 and during the pandemic in 2020, to arrive to an educated conclusion. Instead of claiming false predictions, we at Sage Real Estate are committed to following the data. We track fourplex market data on Long Beach fourplex apartments that nobody else in the world is tracking, so our apartment owners and real estate investors in Long Beach can make the right decisions on their investments. Here is what the numbers tell us:

Long Beach Fourplex Average Sales Price:

  • 2019 – $1,155,000
  • 2020 – $1,165,000 (+1%)

Although a pandemic rampaged the economy and investors were worried that it would impact the values of their properties, we surprisingly had a slight increase in the average sales price. Therefore, it’s safe to note that property values were not affected at all. There is still an overwhelming amount of interest for apartment buildings due to historically-low interest rates and an increase in the amount of active buyers looking for deals in the market.

Long Beach Fourplexes Sold:

  • 2019 – 97 sold
  • 2020 – 82 sold (-16%)

We believe the decrease in fourplex apartment sales in 2020 compared to 2019, was due to apartment owners and potential sellers holding on to their properties and waiting to get through the uncertainty of the pandemic without disturbing their tenants before they plan to move forward with selling their properties. It’s not a very concerning drop, and the market would have stayed at an average of 100 fourplex sales per year if not for the COVID-19 pandemic.

Average Days on Market (How Long It Takes to Sell a Fourplex):

  • 2019 – 59 days
  • 2020 – 56 days

If you’re like any other apartment owner thinking about selling your property, you mainly care about two things: What’s the value of my property, and how long would it take to sell it? Based on the numbers from 2020, we saw a decrease in average days on market probably due to a significant increase in interested buyers, again because of historically-low interest rates.

Other Frequently Asked Questions from Real Estate Investors Regarding 2021:

How much more will apartment values increase in Long Beach this year?

Last year in 2020, we saw the slightest amount of average price increase for Long Beach fourplex apartment buildings within the last 5 years. This might be an indication that maybe, just maybe, we are at the top when it comes to apartment building price appreciation. However, the continued interest from an increasing pool of buyers may or may not impact fourplex apartment values for sellers. So if you are someone who is thinking about timing the market and sell your apartment building at the highest potential price point to maximize your equity, this might be a great time to sell your property as many apartment buildings experienced value increases as high as 30% in 2020.

Are the prices of apartment buildings in Long Beach going to increase or decrease in 2021?

After seeing a slight increase of 1% in fourplex apartment prices during 2020, we expect the prices of apartment buildings in Long Beach to remain stable throughout the rest of 2021. This is good news for both buyers and sellers that want to participate in the market.

Are mortgage interest rates going to be raised or remain the same in 2021?

There has been a fear of a rise in interest rates during the first few weeks of 2021. However, what we’ve been hearing from our close sources and trusted experts is that low interest rates will remain the same moving forward in early 2021. Read more about current mortgage interest rates. We believe that the government will continue to do what they can to stimulate certain portions of the economy, including keeping interest rates low.

If you’re a buyer, this is great news! If you’re a seller, it’s still great news as this introduces your property to a bigger pool of motivated potential buyers.

What about Long Beach apartment building inventory in 2021?

The inventory of fourplex apartment buildings in Long Beach is one of the main data points we track that nobody else pays attention to. As of the publishing of this post, there are currently 27 fourplexes for sale in Long Beach, CA. This number is very close to the average amount of apartments in the market every quarter, so we expect no change, whether it’s a massive increase or decrease in inventory moving forward. It is important to note that the multifamily real estate industry significantly different from the residential real estate industry (single family homes, condos, etc.) which currently has a super low inventory (available for sale in the market).

Is the real estate market going to crash in 2021?

A lot of opportunistic real estate investors we speak with on a daily basis expect the market to crash, in hopes of getting great deals on deeply discounted apartment buildings, because of all the tenant protection laws that have been passed throughout 2020. Unfortunately, we certainly don’t believe that the real estate market is crashing any time soon. Despite the global COVID-19 pandemic, new rent control laws, eviction moratoriums, and constantly changing laws that affect apartment owners, the real estate market will not crash because in order for a market crash to occur three things need to take place:

  • Housing market prices significantly drop
  • Buyers hold no interest in purchasing properties
  • Mortgage interest rates skyrocket to astronomical levels

Based on the data that we provided for you today, there are no indicators whatsoever that these scenarios are likely to happen and crash the real estate market.

We expect the 2021 real estate market to be stable, strong, and positive for both buyers and sellers.

As always at Sage Real Estate, our goal is to deliver non-biased objective data for apartment owners and real estate investors like yourself so you can make the right investing decisions regarding your apartment buildings. Join our VIP Investor Resources newsletter to receive timely updates on issues and information that may affect your property.

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