Have rents in Los Angeles and Orange counties hit their pandemic bottom?
The cost of being a tenant rose at a 1.2% annual rate in February — up from 1.1% in January, according to a slice of the local Consumer Price Index. Yes, that’s a minor increase, but it’s the first time this measurement of rent inflation had increased in a month since June 2019.
It’s been a topsy-turvy year for tenants. Last spring, coronavirus-related “stay at home” mandates hammered disproportionally lower-income workers — largely renters. Landlords found demand for apartments plunging, and government moratoriums on evictions made rent collection tough. Discounting soon followed and rent hikes became rare. January’s rent inflation was the lowest since late 2011.
Come 2021, the region’s health and economy is healing. Recent drops in the pandemic’s spread, as well as vaccines, have helped modestly reopen the California economy. That’s apparently firmed the economy enough so that landlords, by,the CPI measurement, could get a slight rent hike.
This is by no means a turn back to rent hikes tenants have previously endured. Remember, rents were rising 5% in February 2020, just before the pandemic struck. The most recent rent-hike peak was in June and July of 2019 at 5.8%, a 12-year high. Rent hikes averaged 5% in 2016-2019, a sharp contrast to the 2009-15 period when local rents rose on average 2% annually.
Also, note that the U.S. Bureau of Labor Statistics’ CPI is a slow-moving yardstick of rents created from polling consumers. So, February’s uptick suggests coastal deals are likely already hard to find. Other rent measurements, built from surveys of landlords, also hint that at a minimum landlords aren’t discounting as much.
Some broader cost-of-living trends from February …
The big picture: The nation’s average rent inflation was up 1.7% while CPI in Western states rose at a 1.6% pace.
The big trend: Local inflation is still modest. It was 3.4% in February 2020 and averaged 2.9% in 2016-2019. This is more like post-Great Recession days when local inflation averaged 1.2% in 2009-15.
Inland Empire: 2.2% two months ago, says the latest bi-monthly reading of overall inflation for Riverside and San Bernardino counties. Rent costs were up 2.3% in a year, by this math.
Elsewhere in the West: Bay Area inflation in February? 1.6% while Seattle had 1.7% and 1% for Phoenix.
Inside the CPI report, local inflation of various goods and services — measuring February’s results with the previous year’s levels — shows that not every item you pay for is uniformly pricier …
Fuel: Gasoline in L.A.-O.C. cost 1.1% less vs. February 2020, by CPI math. Household energy cost 12.5% more.
Food: Groceries rose 3.9% as eating out got 3.1% pricier.
Medical: Bills were 1.6% costlier.
All local services: 0.7% pricier.
Apparel: Clothing was 6.4% cheaper.
Big-ticket items: The cost of “durable goods” (such as appliances and furniture) was 1.4% higher.
Vehicles: New? 0.2% pricier. Used? 8.8% pricier.
Source: Orange County Register