If the past year is any indication, apartment rents will continue dropping in central and coastal portions of Los Angeles County through the next year, with rent hikes occurring everywhere else in the Southern California, a University of Southern California multifamily forecast said Monday.
For example, the Koreatown-Mid City portions of L.A. will see rent decline 1.2% over the next year, while west Riverside and San Bernardino counties will see rent hikes of 9-10%.
The USC Lusk Center for Real Estate, which publishes the Casden Multifamily Forecast each year, warned its predictions are uncertain because the data are “based on a previous year unlike any other previous year.”
The forecast, which normally comes out in the fall, was postponed because forecasting at a time of uncertainly is problematic and possibly misleading, the report said.
Lusk also predicted that despite billions of dollars in rental assistance, many tenants still will owe thousands in back rent, leading to evictions for some. Eight percent in L.A. and
Orange counties reported recently they are “housing insecure.”
“We still have loads and loads and loads of uncertainty,” Lusk Director Richard Green said during an online panel discussion before releasing the report.
Among the unknowns facing the region’s landlords an whether jobs and amenities will come back to downtown and central L.A. once the pandemic ends, or whether a pandemic-inspired migration to less urban parts of the region are going to be temporary or long-lasting.
Citing U.S. Census figures for the past several years, the report noted that working-class and low-income families are leaving Los Angeles and Orange counties for the Inland Empire, other parts of California as well as Nevada, Arizona and Texas.
Migration to Texas is up about 10%, Green said. Harris County, home to Houston, for example, built 60,000 homes last year, compared with less than 30,000 built in L.A. County.
“Harris County built double the number of housing than L.A. County with 40% of the population,” Green said. “People are leaving California because there’s no place for people to live.”
The forecast predicted rent would drop in four L.A. County submarkets: Koreatown- Mid City (-1.2%), Inglewood (-1.1%), Coastal Communities and Beverly Hills (-1%) and downtown (-0.7%).
Gains of 1% or less were predicted for Burbank-Glendale (0.6%), the rest of the San Fernando Valley (0.7%) and the Long Beach-South Bay area (1.1%).
Northern valley gains still are expected to be small: An increase of 2.1% is expected in Pasadena, 3.1% in the San Gabriel Valley, and 3.4% in Palmdale, Lancaster and Santa Clarita.
Rents in four Orange County submarkets are forecast to rise in the 3-6% range with north county rents rising 3.1%, west-central rents rising 3.7%, coastal rents rising 4.4% and south county rents rising 6.2%.
Eviction bans protected most renters from losing their homes during the pandemic, the report said, but many tenants still owe substantial back rent.
Federal and state rental assistance will help pay off much of that debt.
But U.S. Census figures from late April show about 459,000 households in Los Angeles and Orange counties, or 8%, consider themselves “housing insecure,” meaning that are behind on their rent or mortgage payment or think they are about to be, the report said.
“Evictions of even a fraction of people in such straights will push up vacancy rates,” the report said.
Source: Orange County Register