Long Beach Fourplex Market Update: Q3 of 2020

How’s the Long Beach multifamily market doing? You may be wondering: “How much is my property worth?” or “How long will it take for my property to sell?”  This is your 2020 Quarter 3 Market Update on Long Beach fourplex sales. If you’re a Long Beach apartment owner, you’re probably thinking a few things. One, is it time to sell? Two, do I want to leave the state of California? Three, how much longer is this rent moratorium going to last? And four, interest rates are low, how long are they going to last?

Today we’re going to be looking at data specific to your Long Beach fourplex so that you can make the proper data-driven decisions on whether to buy, sell, or trade. At Sage Real Estate, we pride ourselves in being the only firm dedicated to following the trends of the fourplex market in the city of Long Beach. 

Today we’re going to be looking at the Quarter 3 Market Trends, so let’s get into the numbers:

  • Number of Sales
  • ​​Average Sales Price
  • Average Days on Market
  • Average Active Inventory

Number of Sales

What we’re seeing right now is in Quarter 1, we sold 19 fourplexes. We dipped down to 14 sales in Quarter 2, and then we’re back up to 18 at the end of Quarter 3. This is telling us that consumer confidence has returned. Investors and buyers want to continue buying at a level that we call “pre-COVID” days. That’s a positive sign for any buyer or seller out there when it comes to apartment buildings.  ​So far in the city of Long Beach to date, we have about 50 sales.

Four years ago we were averaging about 100 fourplex sales per year, and this year we’re going to be at around 60.  That’s a decline in the number of fourplex sales by about 40%, and a lot might have to do with COVID and investors taking the “wait and see” approach.

Quarter 1: 19 Fourplexes Sold 
Quarter 2: 14 Fourplexes Sold (-26.32% from Quarter 1)
Quarter 3:  18 Fourplexes Sold (+28.57% from Quarter 2)

SageAdvice: Investor confidence seems to be returning to pre-COVID levels.  This is a good indication for prospective Sellers, as they can expect increased demand for 4-unit properties.​

Average Sales Price

​At the end of Quarter 3, our average sales price for all of Long Beach, when it comes to the fourplex market, was at $1,156,000.  This is up from Quarter 2 by about 8% and still higher than Quarter 1.  What this tells us is that we’re seeing an increase in the average sales price, which is a plus, and as numbers are increasing from Quarter to Quarter, so is the average sales price.  Therefore, the reason we had a decline in the average sales price in Quarter 2 was because of COVID and its uncertainty.

In Quarter 4, we anticipate the same level of increase in terms of interest from both buyers and investors who want to take advantage of the low interest rates.

Quarter 1:  $1,054,386
Quarter 2:  $1,066,062 (+1.12% from Quarter 1)
Quarter 3:  $1,156,667 (+8.50% from Quarter 2)

Sage Advice: Investors are clearly taking advantage of the low cost of capital.  If you are considering selling, low interest rates will produce a larger pool of Buyers.

Average Days on Market

​Now, moving on to average days on market. As a fourplex owner, you definitely want to know how long is it going to take to sell your property? At the end of Quarter 3, it was taking 61 days on average to sell a fourplex in the city of Long Beach.  At the end of Quarter 2 we were at 67 days on market, and at the end of Quarter 1, which was obviously pre COVID, the average time on market was 37 days. 

When we look at the Quarter 3 average days on market of 61 days, we’re not too alarmed because as we looked to the prior years, the overall average for 2019 days on market was 59.  We’re right in line with where we were last year in terms of how long it’s taking to sell a property.  One thing that’s important to note is that although the average is 61 days at the end of Quarter 3, our average as a firm is under 7 days. When we sell a fourplex and we advertise the property, we are under a week on the market. So we are beating the average by 10 times faster.

Quarter 1: 37 Days
Quarter 2: 67 Days (Properties taking 81.1% longer to sell than Quarter 1)
Quarter 3: 61 Days

Sage Advice: Properties are taking much longer to sell because of COVID.  At Sage Real Estate, our average time on market is 7 days, ensuring a faster and smoother transaction for Sellers.

Average Active Inventory

Now, moving on to average active inventory. This is a stat that we certainly pride ourselves in because we know for a fact nobody else in the world is tracking this.  At the end of Quarter 3, there were 34 properties on the market on average, which is up from Quarter 2 when there was 29, and that’s up from Quarter 1 with an average of 26. What we noticed during the 3rd Quarter, is that our highest peak of active fourplexes on the market was 41, which is a bit alarming because last year the average for the entire year of fourplexes on the market was 26. 

Currently, with an average is 34 and a peak of 41, it seems like every week we’re having an uptick on inventory.  If you were trying to time the market, I encourage you to give us a call because what we’ve been seeing is that the competition continues to increase.

Quarter 1: 26 Fourplexes on the Market
Quarter 2: 29 Fourplexes on the Market
Quarter 3: 34 Fourplexes on the Market

Sage Advice: In Quarter 3 of 2020, we saw the highest number of active fourplexes with 41 on the market, meaning proper positioning is more vital than ever.  We have more buyers for properties like yours, call us today.

Sage Advice for Buyers

​If you’re thinking about putting your fourplex on the market, there are going to be more options for the buyer, which is good news.  From low interest rates and more inventory, it’s going to be a better selection that might start changing the market from what I would call a sellers market to a push towards a balance between buyers and sellers, which is a plus for everybody. 

Here is our overall thought: we are a bit concerned in that inventory has been rising.   We deal with a lot of investors who are coming onto the market and we’re telling them this: inventory is high, so you’re going to have a lot of options when it comes to buying. We are seeing a trickle down in prices and inventory, which is a plus for the buyer.  Let’s talk about interest rates.

Some of our clients are refinancing their fourplexes and going down to rates as low as 2.99% interest on an investment property, which is terrific.  While some of you are never going to sell, which we respect because we appreciate the concept of being a long-term investor, if you are not going to sell, what I encourage you is reach out to a lender, who I can certainly recommend, to take advantage of the low interest rates.  What we are hearing from the expert that I follow is that we could expect interest rates to continue through the end of next year till December 2021.  

Sage Advice for Sellers

​What if you’re a seller and are trying to time the market? I know a lot of us out there are again concerned about the upcoming election. Some of us are concerned of the direction that California’s headed, and we’re talking about going to Arizona, Idaho and a few other places.   We’re trying to time the market, and will make sure that we sell at the top. 

When you work with Sage two things are going to happen, we will sell 10 times faster and for 10% more; please reach out to us, we’d love to help.

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