Los Angeles apartment rents have fallen 6% since the pandemic began Apartment list. In September alone, market rents fell by 1.1%. While this is a noticeable decline, Los Angeles ranked 11th in the US as rents have come down.
"As the recession deepens and remote working kicks in, many tenants have new expectations of what they want in a home." Rob Warnock, research fellow at Apartment List, tells GlobeSt.com. “Obviously there is a need for cheaper housing, but also a desire for more physical space that could inspire tenants to move to cheaper regions or to leave the rental market altogether and buy a house. All of this is putting house prices under pressure in the country's most expensive regions. "
The colleagues on the west coast of Los Angeles, San Francisco and Seattle, on the other hand, recorded a more pronounced decline in apartment rents. "While southern California has many technology-driven jobs, a smaller percentage of the L.A. workforce can work remotely compared to Seattle and San Francisco, according to the Census Bureau," said Warnock. “So the LA rental market is a bit firmer than theirs physically, which keeps prices from falling that much. Keep in mind, however, that L.A.'s price cuts are still quite dramatic at the national level.
While other major West Coast markets saw sharp falls in rents, Los Angeles rents fell across the state of California, where home rents fell 4.6%. "Outside of the major coastal centers, California still has many affordable cities where prices aren't falling nearly as quickly (or in some cases still rising)," says Warnock. "For example, during the pandemic, we actually saw rental prices rise across much of the Central Valley. So at the state level, these trends will offset a little."
Given the ongoing pandemic, rent cuts are likely to continue until the end of the year. "Because the market usually slows down in winter and prices fall, even if they have risen dramatically in the summer months," says Warnock. "Winter is the 'slow' season for the rental market as fewer people move and people usually focus on other types of expenses, like vacations and vacations."
Apartment List recently updated its methodology as well. The company still uses a rental analog of a repeat sales estimator that controls composition, but now identifies the rental rates posted as opposed to the listed or requested rental rates. "We're always looking for ways to improve the rental estimates we publish," says Warnock. “In this case, the main objective was no longer to calculate rents on the basis of list prices, but only to look at prices. In this way, statistical distortions are filtered out that can occur when apartments are rented at a price lower than the original asking price, which is particularly common in the current market climate. "