USC Casden has released its annual report on Southern California rents (in LA, OC, SD Counties, and the Inland Empire) and daaaaamn this market is tiiiiiight. They've poked their head out, seen the specter of rapidly declining vacancies, and declared two more years of rent increases. Across the four markets, nearly 6,700 new multifamily units were completed from spring 2012 to spring 2013, but nearly 11,900 units were absorbed during that time. Blame, natch, the crazy-tight housing market: "the rapid increase in home prices and interest rates are pricing first-time homebuyers out of the local market," according to one of the report's authors. Los Angeles County had the biggest rent increase in SoCal--rents went up 2.86 percent to an average of $1,435 (Orange County is still the most expensive though, at $1,572). LA added 3,100 new apartments over the year (a 120 percent increase in new units), but absorbed nearly 5,800. The vacancy rate dropped down to 3.2 percent.
The study also analyzed hundreds of smaller submarkets; here's a roundup of some of the best and worst neighborhoods for renting now and into the future:
-- Santa Monica had the highest average rents at $2,328.
-- Carson/San Pedro/East Torrance/Lomita had the biggest increase in vacancies, up 33.3 percent.
-- Beverly Hills/West Hollywood/Park La Brea had the biggest jump in average rent, it show up 7.6 percent to $1,996.
-- Inglewood/Crenshaw was the only submarket to drop in average rent price--it went down .39 percen to $1,022.
-- Chatsworth/Canoga Park had the highest number of new units.
And into the future:
-- The report predicts LA rents will increase 1.8 percent between spring 2013 and spring 2014, and 3.8 percent between spring 2013 and spring 2015.
-- The largest increases will probably be in Panorama Hills/San Fernando/Pacoima and Mar Vista/Palms/Culver City.
-- Vacancy rates will probably get down to 2.9 percent by next year and 2.6 percent the year after.
-- Marina Del Rey/Venice/Westchester and Santa Monica will probably have the biggest decreases in vacancies.
· USC Casden Multifamily Forecast [USC Lusk]