LA: Affordable Housing Wanted

By Alex Girda

Los Angeles rent evolution, click to enlarge

Rent growth in Los Angeles is continuing at a rate double the national average, largely due to solid gains in a few key employment sectors and renter interest pivoting toward the area’s suburbs. Although rents averaged $1,947 as of April, among the highest in the nation, new stock is focused on the upscale segment and affordability issues are deepening.

Los Angeles enjoys a deep pool of highly skilled professionals and a thriving economy. Overall cargo volume at its two ports grew by 1.8 percent in 2016, keeping trade transportation and utilities as the area’s economic backbone. Health and education added 31,000 jobs in the 12 months ending in February, accounting for nearly half of job growth. Following the passing of Senate Bill 1 by the California Legislature, infrastructure funding will be supplemented by a gas tax increase and the introduction of new vehicle fees. Meanwhile, the National Football League’s Chargers confirmed their relocation from San Diego, the second major sports franchise to do so in less than a year.

Multifamily inventory increased by 2.6 percent in 2016, a cycle high. The pipeline consists of nearly 100,000 units in all phases of development, pointing to further expansion in coming years. With the bulk of units aimed at the Lifestyle segment and occupancy in working-class assets rising steadily, we expect rent growth to be driven by Renter-by-Necessity assets in 2017.

Read the full Yardi Matrix report.