With millions of Angelenos now vaccinated and rent prices more favorable than they were a year ago, many are beginning to search for a new apartment.
If remote work has presented you with the opportunity to move to a new neighborhood or you’re simply looking for a better deal than what you currently have, the USC Casden Real Estate Spring Multifamily Forecast offers some insight into how the Los Angeles County rental market is expected to perform through the remainder of 2021.
According to the annual report, rents are projected to increase in suburban areas of the county, led by Palmdale-Lancaster-Santa Clarita where prices could climb 3.4 percent. These northern markets were joined by other outer regions like San Gabriel (+3.1 percent), Pasadena (+2.1 percent), South/Southeast Los Angeles (+2.0 percent), and Long Beach-South Bay (+1.1 percent).
Defying their sleepy reputations, the San Fernando Valley and Burbank-Glendale are anticipated to record rent hikes of 0.7 percent and 0.6 percent, respectively. “The farther one gets away from the city of Los Angeles, the greater seems the potential for rent growth,” explains the report.
Dense urban centers including Downtown Los Angeles and Koreatown-Mid City have experienced higher-than-normal vacancy rates throughout the pandemic, and rents are expected to continue falling as a result. These areas have also seen an influx of new luxury apartment rentals, which proved to be less popular during the pandemic as onsite amenities closed to residents.
DTLA rents are forecast to decline by 0.7 percent, while average rents for Koreatown-Mid City could be slashed by 1.2 percent. Even once-booming rental markets like Inglewood and Coastal Communities-Beverly Hills are predicted to see rents decrease by 1.1 percent and 1.0 percent.
“The shuttering of office buildings and amenities such as restaurants reduced the willingness of tenants to pay a rent premium in centrally located places,” reads the report. Instead, renters sought out larger, more affordable apartments in farther-flung areas of the city. The report noted that achieving herd immunity in Los Angeles could potentially reverse this trend, leading to “modest rent growth in central markets and slow rent growth at the periphery.”
Another factor that contributed to declining rental demand and prices in Los Angeles County was population loss. COVID-19 deaths and fewer newcomer arrivals caused California’s population to decline for the first time since it became a state in 1850. Untold numbers of Angelenos also flocked to the Inland Empire, Phoenix and Las Vegas in search of lower rents and sunny weather.
The report pointed to low mortgage rates as yet another reason for dwindling demand, as many Los Angeles renters took the plunge into homeownership. Remote work policies have allowed prospective buyers to expand their home searches to areas they wouldn’t have previously considered. And favorable mortgage rates can make owning more advantageous than renting in some situations.
The authors emphasized that lifting the eviction moratorium could cause vacancy rates to climb even higher. An estimated eight percent of households in Los Angeles County are behind on their rent or mortgage payments, according to a US Census Housing Pulse Survey from late April 2021 cited in the report. “Evictions of even a fraction of people in such straights will push up vacancy rates,” wrote the authors.