L.A. County Rents Expected to Decrease

By Gregory J. Wilcox, Writer
Published: Apr 7, 2010

Apartment dwellers in Los Angeles County will catch a break this year with rents expected to drop 3.5percent, according to a forecast released today.

Vacancy rates will also drop but that won't slow rent decreases, said the Casden Multifamily Market Forecast compiled for USC.

The forecast said that between the fourth quarter of 2009 and fourth quarter of 2011, average rents will drop by 5.2 percent.

"Overall, Southern California will not see sustained increases in rents until the greater economic health of the region improves," said Tracey Seslen, co-author of the forecast.

The apartment sector is still reeling from the 225,000 jobs lost in the county during the brutal recession, she said.

The future health of the Southern California apartment market continues to be shaped by jobs, housing prices, the "shadow" market of rental homes and condos, and new construction, Seslen explained.

Housing prices have been rising and unemployment in the county is currently at 12.3 percent and many luxury condos that didn't sell during the recession have been turned into rental units.

The forecast shows that:

Between the fourth quarters of 2008 and 2009, the county's vacancy rate fell from 7.8 percent to 6.1 percent. It is expected to reach 5.2 percent by the end of 2011.

During the same period, average rents in the county declined from $1.85 a square foot to $1.73 a square foot.

The overall economic outlook for the county is expected to improve this year, but it will take time for the apartment sector to catch up, Seslen said.

Jim Clarke, executive director of the Apartment Association of Greater Los Angeles, said that the city was especially hard hit, with vacancy rate exceeding 12 percent in on some places like West Los Angeles.

As the recession deepened, some renters either moved back home or doubled up with friends.

That's forced apartment owners to reduce rents not only to attract new tenants but to also hang onto the renters they have.

Clark senses things are starting to turn around but recovery for this sector won't be quick.

"We're probably not going to feel it for another year," he said of a market rebound.