LA rents: Vacancy rate falls to 2.7 percent as area's rental market tightens further

Does it feel harder and harder to find an apartment in Los Angeles?

It's not in your head.

The Census Bureau released data Thursday showing the rental vacancy rate for metropolitan Los Angeles was 2.7 percent in the last quarter of 2015, compared to 3.8 percent for the first three months of the year. 

Greater Los Angeles (the Census includes Long Beach and Anaheim) has one of the tightest rental markets in the country. Only three other major metropolitan areas had lower vacancy rates at the end of 2015: San Jose was at 2.5 percent; Portland, Ore. and Allentown, Pa. were at 2.4 percent. Nationally, the vacancy rate is 7 percent.

The latest Census numbers represent a steady decline in apartment availability in the Los Angeles area over the years. In 2010, the vacancy rate hovered around 6 percent.

The lower the supply, the more demand landlords see. Some may substantially raise rents after an apartment has been vacated, and that makes apartment-hunting particularly tough for people who are lower-income and need housing subsidies.

The increasingly constrained supply is not surprising given that Los Angeles has the highest rentership rate of any major metropolitan area: 52 percent, according to Harvard's Joint Center for Housing Studies.

Exacerbating issues is that Los Angeles is a desirable place to live because of climate and job opportunities, said Devin O'Brien, economist for the apartment search site Zumper. "So net migration to a place (like Los Angeles) is going to be pretty high relative to supply," O'Brien said.

He said Los Angeles also is drawing professionals from other high-rent locales such as San Francisco and New York where a median 1-bedroom rents for $3,590 and $3,280, respectively. A similar unit in Los Angeles rents for $1,800 to $1,900, he said.

O'Brien said demographic trends are also at play in Los Angeles. For instance, millenials are staying in the rental market longer than their parents did because they like the flexibility that a rental offers versus a house.

"When you think of our parents, in their lifetime, they have had three home purchases over the course of 60 or 70 years," O'Brien said."Now that first home-buying cycle is being displaced by people renting through their 20s and mid-30s."

As more people occupied rentals in Los Angeles in 2015, the Census found that home ownership dropped slightly, from 50.2 percent in the first quarter of 2015 to 49.1 percent in the fourth quarter.