It took a pandemic to make it happen, but Los Angeles rental prices appear to be on the way down for the first time since the Great Recession, according to a new report from real estate data tracker CoStar.
Between the first week of February and today, rental prices in LA fell from $2.51 per square foot to $2.49 per square foot, on average. That amounts to a roughly $15 price reduction for a 750-square-foot one-bedroom apartment.
It might not seem like much, but it’s the first significant decline in rental prices recorded in the Los Angeles area since 2010, the report says.
With hundreds of thousands of Angelenos now out of work, and nonessential workers ordered to stay at home, many renters are in need of more than a dip in prices.
Los Angeles Mayor Eric Garcetti last week signed into law rules that temporarily block landlords from evicting tenants unable to pay because of the COVID-19 outbreak; they also bar landlords from raising rents in apartments covered by the city’s Rent Stabilization Ordinance.
According to CoStar, it’s newer apartments—which aren’t covered by LA’s rent control regulations—that are seeing the biggest price dips right now. Typical rents for these units fell by 0.75 percent between March 11 and March 30. If that trend continued over a full year, it would amount to a 12 percent drop in the monthly cost.
Brand new units in particular could be difficult for property managers to fill at a time when public health officials have urged residents to avoid contact with those they don’t live with, and stand at least six feet apart.
The report notes that prices for newly built apartments in the Downtown area were on the way down prior to the outbreak; rents there have declined 4 percent since the beginning of the year.
Rent reductions have varied significantly by neighborhood. In Hollywood, prices fell by 0.47 percent over the past two-and-a-half weeks. Over the same time period, rents in Pasadena and the South Bay fell more than 2 percent.
CoStar analyst Stephen Basham writes that “rents will continue to fall, and vacancies will rise in the short term,” but the longterm effects of COVID-19 on Los Angeles’s rental market are difficult to predict.
The sudden loss of income many residents are experiencing is likely to impact how much they’re able to pay moving forward. On the other hand, the region’s severe lack of affordable housing will continue to have an impact on prices.
“The coronavirus outbreak won’t fundamentally alter Southern California’s severe housing shortage, which continually tilts the playing field in favor of landlords and owners,” he writes.