Santa Monica Lookout
|LA Area Rental Prices to Continue Soaring, Report Predicts||
By Jorge Casuso
April 14, 2016 -- Santa Monica is already part of the most expensive rental market in the country, and rents are expected to continue rising in the Los Angeles area through 2018, according to two studies released this week.
The 2016 USC Casden Multifamily Forecast, which was released to the public Thursday, found that despite housing construction back at pre-recession levels, demand for apartments throughout the state will keep vacancies low and rents on the upswing.
Average rents in Los Angeles County are expected to increase by $109
over their 2015 levels by 2018, according to the 36-page report prepared
by Beacon Economics. The average rent had already seen a $59 increase
last year over 2014, while the vacancy rate remained flat at 4.2 percent.
California is bucking a national trend that is seeing the rental housing bull market start to wane as more people take advantage of an improving employment market and more readily available credit, according to the report.
That's in large part due to home prices that are twice the national average, as well as regulatory controls such as the California Environmental Quality Act (CEQA) and Proposition 13, which combined with the population growth to drive up home prices and construction, according to the report.
This has resulted in fewer residential building permits per-capita in
California, which is home to 13 percent of the nation’s population,
but issued only 8 percent of residential building permit, the report found.
The numbers have dire implications for low-income renters who can no longer afford cities, like Los Angeles, which have traditionally been havens for newcomers hoping to realize the American Dream, Zillow economists said.
"This research shows that it's harder than ever for kids who grew
up in the country's lowest income households to live in the places where
they're most likely to succeed," Zillow chief economist Svenja Gudell
said in a statement.
In Santa Monica, a household annual income of $100,000 is required to afford anything larger than a one-bedroom apartment, according to a study by the City's Rent Control Board ("Santa Monica Affordable Housing Disappearing," Study Says," March 9, 2016).
The full USC Casden Multifamily Forecast -- which provides detailed analysis of the 52 submarkets and two-year projections -- can be found at https://lusk.usc.edu/casden/multifamily/report
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