Is the peak behind us? Market tops are usually lengthy and difficult to pinpoint except in hindsight. It is clear the upward trend has been reduced. Sales volume of LA apartments was less in 2016 than 2015 by about 50%. Average sale price per unit and price per sq. ft. are lower by about a third in 2016 than the year before. In the past twelve months interest rates increased from 3.5% to 4.2%. When interest rates go up, also cap rates go up and real estate values decline. In 2007 West LA apartment cap rates were 5% and GRM 15, now these cap rates are 3.1% and GRM 17. Is the real estate market going to decline now? Unlikely. The real estate market has been strong for nearly eight years. By historic measure the current market is in old age. Current trends say it is still growing but at a slower pace.
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