Los Angeles' insane rents might finally be coming down. After a glut of new apartments downtown sparked a cooling of rent increases, there's new evidence suggesting that the sharp rise in lease rates across the county could be leveling off.
A new report from real estate technology and analytics firm RealPage found that the average rent in Los Angeles County actually decreased by $19 from September to October. “Lots of new apartments coming online is keeping up competitive pressure, particularly in L.A. and Orange County,” RealPage's vice president for analytics, Jay Denton, said in a statement.
“Annual rent growth in Los Angeles and most of the rest of Southern California now is cooling,” Greg Willett, RealPage's chief economist, added via email. “This performance trend follows the pattern exhibited in most of the rest of the country in 2016.”
Indeed, average rents decreased by $6 in Orange County, $13 in the Inland Empire (San Bernardino and Riverside counties) and $52 in Ventura County. The nation as a whole saw a $10 decrease in average rents from September to October, according to RealPage.
The firm also shows that L.A. County's annual rent growth, now at 2.4 percent, is at its lowest level since 2015. It found the average overall rent in the county is $2,277 — still out of reach for most Angelenos. The decrease in October broke “a string of increases in eight of the previous nine months,” according to a RealPage statement.
One of the driving forces for rising rents in Southern California has been demand. But the firm found that even occupancy cooled off slightly last month. It found that L.A. County's rate was 96 percent, compared with 96.2 percent in October 2016. Orange County went from 96.3 percent to 95.9 percent occupancy this fall. And Ventura County went from 96.2 percent to 95.3 percent.
Of the SoCal counties analyzed, only Riverside and San Bernardino saw a jump in occupancy — from 95.9 percent in October 2016 to 96.2 percent last month.
Experts have said some urban Angelenos fed up with local rents and home prices have been moving to far-away exurbs that have cheaper housing. That, in turn, is starting to push up rents and occupancy rates. “The lack of supply in Riverside is conducive to strong rent growth,” Denton said.
Economist Willett said that rent increases will continue to cool off in the months ahead. “Los Angeles rent growth appears likely to remain modest, near the 2 percent mark, during the coming year,” he said.