The COVID-19 pandemic disrupted what used to be a thriving real estate investment market in Los Angeles. Multifamily housing demand quickly declined in the early months of 2020 as many renters fled L.A. for less expensive metropolitan areas like the Inland Empire and Phoenix.

But as we head into 2021, there are signs that the multifamily investment market may be adjusting. Demand increased over the second part of 2020, and recently returned to pre-pandemic measures.

Renter preferences have shifted due to this economic disruption. Renters started to prefer affordability and square footage over location and amenities. This is evidenced by changes in L.A.’s premier zip codes with small, high-end units.

As remote working has become the new norm, pricey apartments near corporate locations are becoming less favored. Extensive rent losses sharpened in 2020 in areas such as Burbank, Santa Monica, Culver City, and downtown Los Angeles.

On the contrary, the L.A.’s outlying residential suburbs has escalated their demand. Inventories in these areas are below 4%, and most Valley submarkets saw rent increases last year.

After real estate sales decreased in the early months of the outbreak, investors slowly began to re-enter the market in the second half of the year.