Seventy days.
That's how long LA City pre-1978 multifamily owners have before the rewritten Rent Stabilization Ordinance takes effect on July 1, 2026. Every building underwriting I've been involved with since December has priced in what the rewrite does to cash-flow growth. Every deal that closes in Q2 either gets done under the old formula or gets repriced into the new one. That timing is the single most important variable in LA multifamily right now.
Here's what the numbers, the legislation, and the buyer pool actually look like as Q2 2026 gets underway.
2025 closed with LA multifamily transaction volume between $6.5 billion and $7.9 billion across approximately 557 deals, per Kidder Mathews' year-end reporting. That's meaningfully above the 2023 trough of roughly $4.6 billion — which was itself a 15-year low — and above 2024's approximately $6.9 billion.
Three things to understand about that recovery:
Volume returned faster than pricing. A $7 billion year in 2025 is still roughly 15% below the 2021 peak of $9 billion+ per Colliers. Volume recovered in 2025 because buyers and sellers started finding clearing prices; pricing itself has not returned to pre-2022 levels on most inventory and does not appear likely to on pre-1978 RSO-constrained buildings this decade.
Institutional capital is back. The private-equity and REIT capital that went effectively dormant from mid-2023 through late 2024 returned meaningfully in 2025 and is active in Q1-Q2 2026. Post-1995 Costa-Hawkins exempt inventory is receiving the most aggressive bidding; pre-1978 RSO-covered inventory sees the same institutional buyers but with tighter underwriting screens.
Transaction mix is shifting toward older, lower-tier inventory. Newmark and Kidder both tracked this shift through 2024-2025: more Class B and C trading, relatively less institutional Class A. That's a function of where the distress is — owners who can't refinance at 2025 rates are the most motivated sellers.
Q2 2026 should produce volume ahead of Q2 2025 on pace. The specific acceleration variable is how aggressively pre-1978 sellers transact before the July 1 RSO rewrite takes full effect on buyer underwriting.
LA City Council approved the rewritten Rent Stabilization Ordinance on December 12, 2025. The revised formula takes effect July 1, 2026.
The key changes from the pre-rewrite framework:
The practical effect for pre-1978 LA City buildings is that the allowable path to capture in-place-to-market rent gap through annual increases is materially narrower than it was under the prior formula. For buildings where long-tenured tenants already sit meaningfully below market, the gap cannot be closed through the formula alone within any realistic hold period.
Buyers are pricing this directly into offers. I've been watching the repricing absorb through transactions since December; by Q3 2026, the absorption should be largely complete, and pre-rewrite comparables will no longer be reliable indicators of what pre-1978 inventory trades for.
The sellers who transact in Q2 are meeting pricing that later sellers likely will not. That is the specific Q2 2026 window worth understanding.
Post-1995 LA City multifamily is exempt from RSO under the Costa-Hawkins Rental Housing Act. The rewrite does not apply. This inventory continues to trade on its own merits, and institutional capital has specifically concentrated bidding here in 2026.
LA-adjacent cities — Burbank, Glendale, Pasadena, Culver City, Santa Monica, West Hollywood, and others — operate under their own rent stabilization frameworks or, in Glendale's case, AB 1482 only. The LA City RSO rewrite is not applicable. Each separate city's regulatory environment is its own track.
LA County unincorporated — including Marina del Rey and various Valley and East County pockets — operates under the LA County Rent Stabilization and Tenant Protections Ordinance (RSTPO). The RSTPO was tightened in January 2025 — and is now in some respects more restrictive than LA City's pre-rewrite framework. The historical assumption that "county is easier than city" has inverted. Most sellers still have not adjusted their mental model for this.
The Costa-Hawkins Rental Housing Act has survived three California ballot-initiative repeal attempts — Prop 10 in 2018, Prop 21 in 2020, and Prop 33 in November 2024. The 2024 failure (62% to 38%) was the most decisive of the three.
Costa-Hawkins is the reason post-1995 LA multifamily is exempt from local rent control. It is the reason for the widening valuation premium between post-1995 and pre-1978 LA City inventory. A successful repeal would fundamentally change the LA multifamily landscape — billions in post-1995 valuation premium would be at risk.
For Q2 2026 planning purposes, Costa-Hawkins is effectively permanent. No state ballot measure is pending for 2026. But sellers with planning horizons beyond five years should continue to treat statute risk as real.
Measure ULA — the LA City transfer tax approved in November 2022 — continues to apply to qualifying sales within LA City limits above the specified threshold. The ordinance has been subject to legal challenges (upheld to date) and has seen adjustments since the original April 2023 enactment.
For Q2 2026 sellers of LA City multifamily near or above the Measure ULA threshold, the specific current threshold and rate should be verified against current LA City documentation before any pre-listing net-proceeds model is finalized. Sellers in adjacent cities (Burbank, Glendale, Pasadena, Culver City, Santa Monica, West Hollywood) and in LA County unincorporated are not subject to Measure ULA at all.
The transfer tax has contributed to the continued shift of $5M+ institutional transaction volume from LA City into LA-adjacent jurisdictions. That pattern continues in 2026.
Per Yardi Matrix's April 2026 reporting:
The supply story is genuinely supportive of rent growth in the medium term — new construction starts have collapsed since 2023, which means 2027-2029 deliveries will be materially below replacement need. That dynamic supports the post-1995 pricing premium and puts a floor under rent growth assumptions that buyers are already factoring in.
Near-term, however, 2026 deliveries are still elevated in specific submarkets — notably Warner Center (Woodland Hills), Playa Vista, Downtown LA, and pockets of Hollywood — which moderates immediate rent-growth projections in those areas.
Three pools are active:
Institutional and private equity is concentrated on post-1995 Costa-Hawkins exempt inventory, particularly tech-adjacent submarkets (Playa Vista, Culver City, Westside Class A) and Warner Center–adjacent Woodland Hills. Institutional underwriting in Q2 is disciplined on pre-1978 — aggressive enough to transact on well-prepared assets at clearing prices, quick to walk when diligence surfaces issues.
1031 exchangers are active across the market, with two specific patterns: California sellers exiting LA City RSO-covered inventory into non-LA-City replacement (Burbank, Glendale, Pasadena, out-of-state), and 1031 exchangers moving into post-1995 Costa-Hawkins exempt inventory for regulatory predictability.
Local operators and family offices are the dominant buyer pool in Valley and Northeast LA submarkets — Tarzana, Panorama City, Van Nuys, Highland Park, Eagle Rock. Many have held portfolios for multiple generations. Transaction flow here is heavily off-market and relationship-driven; public listings in these submarkets frequently underperform relative to targeted outreach.
A distinct segment: high-net-worth individual buyers are specifically active on small multifamily (duplex, triplex, fourplex) in coastal and coastal-adjacent submarkets — Venice, Marina del Rey, Brentwood, Pacific Palisades. This segment often pays above what purely institutional underwriting would produce.
Pre-1978 LA City — pricing actively repricing against the RSO rewrite. Q2 transactions may close at better pricing than Q3-Q4 will support. The submarkets where this matters most are the ones most heavily pre-1978 dominated: Koreatown, Hollywood, Mid-City, parts of Hancock Park and Fairfax, Highland Park, and Northeast LA generally.
Post-1995 LA City — bidding environment is the strongest in three years. Institutional capital is present and competitive. Sellers with clean preparation don't need to wait for a market signal.
LA-adjacent cities — Burbank, Glendale, Pasadena see stable pricing, durable buyer pools, and no RSO-rewrite exposure. Transaction volume is steady rather than accelerating. 1031 inflow from LA City sellers continues.
LA County unincorporated — Marina del Rey and other unincorporated pockets absorbing the 2025 RSTPO tightening. Pre-1995 inventory repricing continues. Post-1995 unchanged.
Pre-1978 LA City owners: The pre-July window is meaningful. A listing that launches in April-May can close before the July 1 effective date or within the transitional absorption window. A listing that launches in June or later is pricing into the post-rewrite environment with more embedded discount.
Post-1995 LA City owners: The bidding environment is strong. Institutional capital is present. If the seller's situation warrants a sale, Q2-Q3 is a reasonable window — there is no specific market catalyst requiring waiting.
LA-adjacent owners: No specific Q2 catalyst. Transact when the seller's own situation (estate, refinance maturity, portfolio rebalancing) warrants. The market is reliable.
LA County unincorporated pre-1995 owners: The RSTPO tightening has been absorbed into pricing through 2025. Current pricing reflects it. New 2026 regulatory events are possible; no specific pending action is on the Q2 calendar.
If the patterns I'm seeing continue through Q2:
Transaction volume: Full-year 2026 should land between $7.0B and $9.0B across approximately 650-720 deals — above 2025, still below the 2021 peak, and consistent with the continued institutional return.
Pre-1978 LA City pricing: Should largely complete absorption of the RSO rewrite by year-end. Transactions in Q3-Q4 will be priced against post-rewrite underwriting. Pre-rewrite comparables lose relevance.
Post-1995 LA City pricing: Should continue the modest compression in the Costa-Hawkins-exempt segment, supported by institutional demand and the limited supply pipeline.
Interest rate environment: This is the variable I'm not forecasting. Commercial multifamily refinance activity in 2026 has been shaped materially by the rate environment since 2020-2021 originations. If rates stay where they are through Q3-Q4, expect continued seller volume from refinance-maturity sellers. If rates fall meaningfully, expect institutional bidding to accelerate further.
Legislation: No LA City ballot measure pending for 2026 beyond the already-passed RSO rewrite. Prop 33 failed in November 2024, preserving Costa-Hawkins. LA County RSTPO is stable post-January-2025 tightening. The legislative picture is quieter than 2024-2025 was.
For pre-1978 LA City sellers: does your timeline give you the runway to wait, and is waiting actually earning you anything? For most sellers, the Q2 window is the best remaining pre-rewrite opportunity.
For post-1995 LA City sellers: institutional bidding is strong. Your decision is timing-independent in any meaningful sense — if the sale is right for you, the market is ready.
For LA-adjacent and LA County sellers: regulatory stability is the story. Timing is seller-specific.
This report draws on publicly-available market data from Kidder Mathews, Colliers, CBRE, Yardi Matrix, Newmark, and NAI Capital year-end 2025 and Q1 2026 reporting, plus Marcus & Millichap's 2026 LA Multifamily Investment Forecast. Regulatory framework detail draws on current LA City RSO documentation, the LA County RSTPO framework, and California statewide statute (AB 1482, Costa-Hawkins Rental Housing Act). Michael Sterman's commentary draws on transaction activity within the Sterman Multifamily Group's operating markets as of Q1 2026.
All specific dollar figures reference the source reports. Sterman Multifamily Group does not invent or interpolate specific market statistics.
Request a free evaluation — including a Q2 2026 market-adjusted valuation on your specific building →
Michael Sterman is Senior Managing Director Investments at Marcus & Millichap. He operates across all core LA submarkets and specializes in seller representation for private clients. This quarterly market update will next publish in July 2026 covering Q3.
Thinking about selling? Get a no-obligation evaluation on your building.
Request Free Evaluation →