Sorry to poop on your party, but Los Angeles' high rents won't see much relief in the months ahead, not if a new report from real estate site Zillow is to be believed.
The Zillow Rent Forecast, released today, says the nation's "tech job centers" as well as the West's largest cities, mostly the same places, will see the highest rent increases in the next year. The main thing you need to know about that comes in two words: Los Angeles.
"Rents in the L.A. metro are forecast to grow 4.8 percent over the next year," a spokeswoman for the site said. "Los Angeles is forecast be among the top 10 places with the fastest growing rents."
It's not entirely clear what goes into Zillow's secret forecasting sauce here. The site does look at "inventory" in the nation's 35 largest cities. And it analyzes its own listings to come up with current median rents, or what it calls the Zillow Rent Index.
Los Angeles' expected lease rates in the next year put it in sixth place nationally for rent growth, the site said. Seattle (in
"On a pure dollars and cents basis, the two Bay Area metro markets of San Jose and San Francisco, respectively, remain the most expensive large rental markets in the country, by far," according to a Zillow brief that outlines the site's vision of the next 12 months. "Renters in and around San Jose should currently spend $3,517 per month on rent; in the San Francisco area, median rent runs $3,406 per month. Los Angeles was the next priciest rental metro in August, at $2,593 per month. ... In San Jose and L.A., median rents are expected to rise to $3,677 and $2,718 per month, respectively."
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The areas of Greater Los Angeles that will see the highest rent increases, according to the forecast, include Malibu (12.2 percent), South Pasadena (12.17 percent), Hidden Hills (11.9 percent), Manhattan Beach (11.7 percent) and Coto de Caza in Orange County (10.5 percent).
One thing that can provide rent relief is the construction of new units. That's happening in Los Angeles, but dueling initiatives, the pro-growth Build Better L.A. and the anti-developer Neighborhood Integrity Initiative, could affect your lease rates for years to come.
“High rent growth in these markets is being driven by high demand and low supply,” said Zillow chief economist Dr. Svenja Gudell. "We have more renters today than in the past and most newly formed households are renter households. This taken together with a lack of new rental construction at less expensive price points has been a recipe for rising rents. There is good news for renters on the horizon, though. Current renters in these markets can expect rents to slow down a bit over the next year. Instead of the 10 percent rental appreciation we’ve been seeing in some places, expect growth more along the lines of 4 to 7 percent. This is still high, but will hopefully give renters some relief."