LOS ANGELES-A boom in multifamily has intensified the already notable recovery strides in the California housing market, according to UCLA senior economist David Shulman in an Allen Matkins UCLA Anderson Forecast report. The multifamily market is seeing increased development throughout California and increased investor attention. For this reason, he predicts 400,000 units will come online in 2014 and 2015.

“We think multifamily is in a boom phase because vacancy rates are down to about 4% and rents are rising; on the CPI, they're rising close to 3%, but they are really going up in the market 4%-5% a year,” says Shulman, adding, “there is a lot of money available for pension funds and private equity firms.”

There are several factors contributing to this upward momentum. In addition to the strong fundamentals garnering investor attention, a government ideology shift toward higher densities has also fueled investor attention. “Ten years ago, it was hard to get multifamily zoning for environmental reasons, but now multifamily, especially when close to transit, is viewed as green,” Shulman explains. “All of the sudden it has become extraordinarily easy to have multifamily permitted, and that is part of the reason why we are having this boom in construction.”

The development boom in Los Angeles certainly has not gone unnoticed. GlobeSt.com has reported new developments breaking ground throughout the city, with a specific focus in the downtown submarket. Notable new developments include two land deals in downtown's South Park district finalized earlier this month: three acres purchased by the Wolff Co. for the $250 million G-12 complex and six acres purchased by a joint venture between Mack Urban and AECOM Capital for a multifamily development.

The boom in construction has a downside, however. Rents may be stalled by the large increase in supply in 2014 and 2015, according to Shulman, who believes that the uptick in supply and rents may push people toward home ownership. GlobeSt.com spoke with Mike Rovner, president and founder of Mike Rovner Construction, about the influx of units coming online in an earlier story. In 2009, the market had hit a low, producing only 112,000 units. In Rovner's opinion, the current development boom is really just the market catching up with demand after that development lull, which ranged between 2008-2012.