‘Hot’ Apartment House Market Pits Buyers Into Competition

The Los Angeles apartment market is as unbalanced as he’s ever seen it, says one apartment broker who specializes in the Mid-Wilshire, Miracle Mile, Hollywood and Inglewood areas.

John Kenderdine of Coldwell Banker says there are as many as 30 buyers for each listing. “There are fewer apartment buildings for sale today than there were a year ago,” he said. “A major reason is that many owners are reluctant to sell properties that are appreciating at about 10% a year.”

When owners do sell, the main reason is to take advantage of tax benefits by trading up to a larger apartment, he said. Another reason owners sell is because they don’t want to rehabilitate a building to comply with new city safety codes and other ordinances.

Prices are going up.

He cited the case of a 10-unit apartment building near the Hancock Park area that sold four years ago for about $400,000, and just sold for about $700,000. Kenderdine is now representing an apartment building that was purchased six months ago for 8 1/2 times gross rental income and he expects to sell it for 10 times gross.

He said that in his area there is increasing apartment construction, which is not the case in some other areas of Los Angeles.

Kenderdine said many foreign buyers are in the market.