The cost of living, and especially renting, in Los Angeles continues to skyrocket and will continue to for the foreseeable future. A new third quarter rental market report by Marcus & Millichap confirms that rents are climbing all over town: asking rents citywide were up 7.8 percent to an average of $1,873 per month. For the year, the report predicts rents will climb 4.8 percent overall, "more than doubling the rate of inflation." It seems no one is immune to these rapid rent increases. Even renters seeking the traditionally cheaper cost of living in the San Fernando Valley are out of luck. The past 12 months saw a 7.4 percent increase in asking rent price up in the Valley. Van Nuys/Northeast Valley prices were up 15.1 percent! No offense, but when Van Nuys rent increases are outpacing every other neighborhood in town, LA's rental market might officially be out of control.
Meanwhile, the price of a single-family house has jumped 5.2 percent this year, while median incomes only increased by 2.9 percent, barely outpacing the national average. As the report says: "Many residents will be lifelong renters because of high home prices, providing safety and stability to developer forecasts." (Yeah, your inability to ever buy a home is making developers very happy!) Unsurprisingly, apartment vacancy rates have fallen to just 2.7 percent, even in hot development neighborhoods like Downtown LA. In the past year, more than 5,200 new rentals have come online in LA, and 2,700 of those were in Downtown. There are now more than 15,000 units "under construction through 2017," and every section of town "will receive more than 1,000 units in 2016."
Let's see how each neighborhood breaks down on renting:
San Fernando Valley
The Valley is in the midst of a dramatic rise in prices. Rents are up an average of 7.4 percent. The Northeast Valley in particular is experiencing the most rapid increase in rents—average asking rent price in that area is up 15.1 percent, coming in at $1,438 per month. That's the highest rate of rent increase in the entire city. Other areas in the Valley experienced smaller increases in average rents: the Burbank/Glendale/Pasadena area saw a 6.8 percent increase, to $2,016 per month, and the Sherman Oaks/North Hollywood/Encino markets experienced a 9.5 percent increase to $1,503 per month.
The big jumps may have something to do with a slowdown in new units being added to the market. In the last 12 months, only about 980 new rental units were added to Valley's stock, down from 2,250 the year before. 2016 should see an increase in new apartments though, as 3,100 are expected to be added to the market next year.
Central LA (Downtown, Hollywood, Mid-Wilshire)
Rents in Central LA were up 6.2 percent on average over the past year. The Hollywood submarket had the biggest increases, with average rents rising 7.2 percent to $2,209 per month. Over in Mid-Wilshire, rents were up 6.4 percent to an average of $2,142 per month.
Downtown rents did not experience a particularly big increase, up only 5.3 percent to an average of $2,158 per month. This is probably due to an overstock of rentals, as the neighborhood sees a huge increase in development. The last year saw some 2,800 new rental units built in central LA, but Downtown accounted for more than 1,900 of those. Vacancy rates in Downtown remain pretty high, coming in at 3.7 percent compared to Hollywood's 2.6 percent. As a result, the report found that more than 10 percent of units Downtown offered some sort of concessions as enticement for renters to sign a lease.
Rents on the westside were up 6.8 percent in the last quarter, averaging $2,750 per month. The Palms/Mar Vista market had an even bigger increase, seeing average rents rise 10.5 percent to more than $2,280 per month. Average rents in Santa Monica/Marina Del Rey climbed above $3,000 for the first time ever, up 6.0 percent to hit $3,132 per month. That's even higher than in the Brentwood/Westwood/Beverly Hills area, where average rent was $2,891 per month, up 9.3 percent from the previous year.
Only 460 new apartments were built on the Westside during the past year, with nearly half of those being built in and around Santa Monica. 2016 will see the completion of more than 1,000 new rental units in the area, with more than 700 of them built in Santa Monica and Marina Del Rey.
Rents along LA's southern coast saw an increase too, up 8.8 percent. Long Beach rents increased 8.7 percent to an average of $1,620 per month. 950 new units were added to the rental market in the South Bay over the past year, most in Torrance and Long Beach. More than 820 of those rentals qualified as affordable housing.
· Rentally Deranged [Curbed LA]