A report by Apartment List shows that LA rental rates climbed steadily in June 2017, increasing by about 0.5% and were about 4.8% higher compared to the same time last year.
Angelenos have watched their rental costs rise for six months straight after a dip in January of this year. The rental website used data from listing sites and the Census Bureau to come up with the report.
Higher than the national average
LA’s year-over-year rental increase takes the lead, not just in California, but in the United States overall, exceeding both the statewide and nationwide average of 4.2% and 2.9%, respectively. In June, the average rent for a one-bedroom apartment was $1,340 and $1,730 for a two-bedroom unit.
The median rent for a two-bedroom apartment in LA is higher than the national average, which rests at $1,160.
The report also revealed that LA’s rental rates are rising faster than any other city in the country. By contrast, other cities in the nation such as Houston, Miami, and Washington DC, have seen a dip in rental rates.
Not just LA
Rental costs in nearby cities are outpacing those in LA – rates have gone up by 9.3% in Pomona and 6.4% in Santa Ana within the same time frame. While the former saw the fastest rent growth in the LA metro area, with a year-over-year increase of 10%, it also has some of the least expensive rental rates.
Huntington Beach saw the sharpest drop in the metro area, with rent growth decreasing by 0.6%. The median price for a two-bedroom was $2,350 in June, while a one-bedroom rented for $1,830.
Outside of the metro, Fremont was the most expensive major city to rent a home – the average rent for a two-bedroom was a staggering $3,570.
Rental rates are also rising in neighborhoods throughout LA County with Santa Monica, Venice and Marina del Rey taking the lead. Rent growth has been attributed to the stream of tech money that now flows through these areas, making them more expensive than upscale neighborhoods like Westwood and Beverly Hills.
No signs of slowing down
Experts believe that rental rates in LA will continue to soar well into 2018. Several factors drive rapid rent growth in the city:
- Low inventory
- High demand
- Sluggish new home development
- Strict zoning and environmental laws
- High cost of land
- Household formation
- Job creation
LA was named the most unaffordable city for both renters and buyers in the country – while it is not the most expensive housing market in the U.S., rent is high relative to the median household income.
The demand for apartments continues to skyrocket, not just among low-income renters, but also among high-income earners who prefer renting to owning a home. This has been a boon for property investors who have acquired multi-family properties in the city.
The local government has taken measures to address the housing crisis in LA, offering incentives to landlords who set aside a certain number of residential units for low and extremely low-income earners, as well as amending the Small Lot Subdivision Ordinance.