While the region’s homebuying enjoys a pandemic-era rebound, local landlords are watching their pricing power tumble to an eight-year low, according to the Consumer Price Index.
The cost of renting in Los Angeles and Orange counties rose at a 1.8% annual rate in October — the smallest gain since 2012 and just one-third of the 5.7% hikes seen a year earlier. The U.S. Bureau of Labor Statistics’ CPI has a slow-moving rent index that tracks rental costs by polling consumers. Other measurements that come from surveys of landlords show asking rents dropping in some parts of the two-county region.
The pandemic’s economic damage has slammed lower-paying jobs — a primary employment niche for renters. The region’s landlords, in turn, have struggled to collect rent and been forced to discount rates to keep apartments filled.
The rental market has gotten little to no monetary stimulus compared with the homebuyer/owner segment, which has seen historically low interest rates, financial support for lenders, and generous forbearance offers for those who can’t make mortgage payments.
Just look at the small rise in October’s L.A.-O.C. rent CPI, an index that averaged 5.5% gains in 2019 and 4.6% in 2015-2018. Today, the local rental market looks more like the economically soft 2009-14 period when local rents rose on average just 1.7% annually.
Business restrictions designed to stem the spread of coronavirus have slowed the broad economy. Landlords aren’t alone as many merchants also can’t raise their prices much either.
Consider how small overall local inflation is — rising at only a 0.7% annual pace in October. That’s the slowest gain in five years and down from 3.2% a year earlier. L.A.-O.C. inflation averaged 3.1% in 2019 and 2.3% in 2015-2018 and 1.3% in 2009-14.
Here are other cost-of-living trends you should be watching …
The big picture: The local 0.7% overall inflation rate vs. 1.2% across the nation and in Western states.
Inland: 1.7% for September — the latest bi-monthly reading of overall inflation for Riverside and San Bernardino counties.
Elsewhere in the West: Bay Area inflation was 1.1% in October. Seattle had 2.1% and 0.7% for Phoenix.
Inside the local report, we learned …
Shelter’s burden: Housing eats up the biggest share of local household budgets. Minus shelter costs, L.A.-O.C. prices are actually deflating 0.2% in 12 months.
Fuel: Gasoline in L.A.-O.C. cost 24.4% less in the last 12 months, by CPI math. Household energy costs 9.6% more.
Food: Groceries rose 3.9% as eating out got 5.2% pricier.
Medical: Bills were 4.6% costlier.
All local services: 1.8% pricier.
Apparel: Clothing was 1.2% costlier.
Big-ticket items: The cost of “durable goods” (such as appliances and furniture) was 0.6% lower.
Vehicles: New are 1.2% cheaper while used is 10.6% pricier.
Source: Orange County Register