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Advice for the Decreasingly Lucky Few: Hold on to that Cheap Rental
As if you didn't already know that.
Bubble vs. no-bubble talk continues to swirl around the topic of Los Angeles residential real estate, and now the rental market is following suit. Alas, the evidence further supports that Los Angeles continues to lose its status as the much cheaper alternative to New York and San Francisco.
Make no mistake, the Los Angeles area rental housing market remains quite robust according to the latest Los Angeles Apartment Report by MP/F Research. The report covers the second quarter (April to June) of 2004 and highlights numerous facts that have developers, landlords, and other vested stakeholders cheering, while most renters frown. It’s certainly exciting news that 1,817 new units were completed in this timeframe, constituting a record addition to the housing stock during one quarter in ten years. Demand remains at an all-time high. Occupancy is at 96.4% in metro Los Angeles, while it’s at a not-too-shabby 96.2% in the San Fernando Valley.
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Some figures for comparison's sake:
For those of you who love edge cities and need cheap rent, then the Antelope Valley is for you. An efficiency unit goes for $587 on average, whereas LA “intown” (geographic boundaries unknown) studios rent for $1,228. The extremes are more evident in figures for larger units. Average rent for a three bedroom apartment in Hollywood is $2,104, while this figure hovers at $3,819 in West LA. Must be those outliers, i.e. astronomically priced townhouses by the beach in Santa Monica. (Apologies for any terrible flashbacks to awful required statistics courses.) Meanwhile, the same number of bedrooms will cost an average of $1,303 and $971 a month in East LA and back in the ‘Lope fringes of the region, respectively.
A rebounding economy is in part to thank for this boom. Presumably, job growth is helping fuel the demand and enabling people to pay these higher rents. The Bureau of Labor Statistics claims the area gained 10,900 jobs in the year-to-year period ending May 2004. Whatever the case, LAist hopes that people are pulling in the Benjamins to make the monthly nut. Rent increases in LA metro outpace the national average, so average rents are now 3.7% higher this period than in 2003. The average rent came in at $1,291, which translates to $1.534 per square foot. (Note these figures are averages and not median, so always be wary of statistics, boys and girls.)
The construction boom also remains in full swing. As of July 2004, all those cranes and construction workers you see around town are busy building 10,355 units, most of which will be completed within a year. The surge of interest in both new construction and encouraged adaptive reuse of downtown structures, as well as fresh units in Hollywood, are noteworthy trends. Hollywood accounts for 1,700 units under construction, while there are 3,000 in the Valley, 1,768 in West Los Angeles, and 2,800 downtown. Projections show that there will be willing bodies to fill these new homes, too.
Were not naïve, however, and know that hundreds of thousands of people cant make ends meet as the housing market continues its ascent. Median income in Los Angeles County (approximately $445,000 - correction! Median household income is around $45,000) falls very short of whats needed to pay the mortgage on a median priced home ($448,800 as of July 2004). An annual household income of over $100,000 is required to make that payment. This amount of evidence points to the fact that while college grads, struggling actors without families, and the middle class in general do indeed suffer, the dearth of housing thats affordable to those at the lowest spectrum of the pay scale continues to be an ongoing crisis in Los Angeles. Some are hard at work to find solutions to this daunting and omnipresent issue.
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