Southern California rental prices have spiked sharply in recent years, and a new report from the University of Southern California Lusk Center for Real Estate and Beacon Economics suggests that renters won’t get much relief from that trend in coming years.
According to the report, presented Wednesday at a conference in Downtown LA, average rents in Los Angeles County are expected to jump by $136 per month over the next two years. The report’s authors estimate the average monthly rent now is $2,237, with a countywide vacancy rate of just 3.94 percent.
Renters across the region face similar increases, with the highest price bump projected for Orange County, where rents could climb $149 per month by 2019. Prices in the Inland Empire, San Diego County, and Ventura County are projected to go up $124, $121, and $98, respectively.
The authors of the report note that the region’s unusually low rate of homeownership may be contributing to the high rental prices.
“As employment and wages improve in the region, homeownership remains stagnant,” says Lusk Center Director Richard Green. “This combination is a key stressor in the availability and cost of apartments and has an increasing impact on the local economy.”
Still, for longtime residents, there’s a bit of good news. The authors of the report find that they pay rents that are $200 cheaper, on average, than what new arrivals from out of state pay.
That difference is partly because of rent control laws in Los Angeles and other cities, but Californians also seem to have a leg up when navigating the rental market. Those who recently moved from elsewhere in the state pay just $124 more than longtime residents.
But, while that’s good news for Southern California natives, it’s not great for employers looking to woo talented employees from out of state. Beacon Economics founding partner Christopher Thornberg calls the region’s enormous housing costs “a huge challenge” for employers and new residents alike.
The rent hikes projected in the report are also worrisome in light of LA’s surging rate of homelessness. A recent analysis by Zillow found that a 5 percent swell in rental prices could force up to 2,000 Angelenos out of their homes.
The $136 monthly increase projected in the report represents an increase of more than 6 percent.