With California’s economy scheduled to fully reopen on June 15th, confidence in Los Angeles’ rental market is growing.
In May, the median price of a one-bedroom apartment ticked up 0.5 percent to $1,970, according to the latest report from apartment rental platform Zumper. While this might seem like a marginal increase, the city has seen rents rise by 3.6 percent since prices bottomed out in March, equating to a difference of $70 per month.
The typical two-bedroom LA apartment fetched $2,670 last month, a 0.8 percent boost over April. Prices have been gradually escalating for the past three months but remain down considerably on an annual basis. One-bedroom rent fell 9.2 percent year-over-year in May, while two-bedroom rent declined by 10.4 percent during the same period.
Los Angeles dropped one place in Zumper’s ranking of the most expensive rental markets nationwide, coming in seventh behind other California cities like Oakland, San Jose and San Francisco. These Bay Area markets experienced rapid price growth from April to May, with one-bedroom rents climbing 1.5 percent, 6.3 percent and 1.9 percent, respectively.
“If the course of the pandemic continues to improve, the seasonal events that tend to drive the rental market—such as college students coming back to school and recent grads moving to the city for a job—will return to put upward pressure on rent,” wrote Zumper data analyst Jeff Andrews, who authored the report.
It’s still unclear whether Bay Area rents will return to their pre-pandemic levels, however. A recent study by the California Policy Lab at UC Berkeley and UCLA found that out-migration from San Francisco increased by 30 percent in 2020 compared to the previous year.
The region employs a large number of high-income tech workers who have benefitted from permanent work-from-home policies. Many former San Franciscans have settled in comparatively affordable outer markets like Sacramento and Lake Tahoe. No longer tethered to a downtown office, many of these individuals may choose to stay put.
Nationwide, one-bedroom rent rose 3 percent year-over-year to a median price of $1,254, while two-bedroom rent surged 4.8 percent to $1,544. Cheaper cities, which were migration magnets at the height of the pandemic, have seen rents stabilize as expensive coastal cities bounce back.
The report highlighted Phoenix and its surrounding suburbs as areas that have experienced “explosive growth in rents” since the start of the pandemic. The suburban city of Glendale logged a 15.7 percent annual increase in one-bedroom apartment rent as Phoenix proper saw a 9.1 percent price jump. Meantime, four Phoenix suburbs recorded annual rent hikes of over 16 percent for two-bedroom apartments.
“The rent boom is following a population boom that’s being driven by domestic migration,” wrote Andrews. An estimated 82,380 people moved to the Phoenix metro area in 2020, growing its population and housing demand substantially.