If you want to find a basket to live in, you’ll likely have more luck than finding a house in Los Angeles that meets your price. Prices in LA are skyrocketing – and are doomed to do so for the near future with relief nary in sight. Sure, if you’re a millionaire and want to invest, you’re in luck. Residential houses and commercial property are popping up all the time. But if you have a history of low credit rating, bankruptcy, or foreclosures and are looking to borrow conventional loans, you’re in trouble. Price tags are spinning out of control and few can afford them. Even traditionally cheaper locations in LA, such as San Fernando Valley, see rents climbing to record highs with prices in the Vally, for instance, witnessing a 7.4 percent increase!
As regards real estate prices in Los Angeles for the coming year: The most recent market report by Marcus & Millichap says that this year’s asking rents citywide were up 7.8 percent to an average of $1,873 per month and the company reports that 2016 will be no better with rents climbing to 4.8 percent overall.
And if you want to know how much median homes in Los Angeles cost? Here’s the shocker: The price of an LA single-family house has jumped 5.2 percent this year in contrast to median incomes that hover around 2.9 percent. Marcus & Millichap half-jokingly state that Los Angeles seems to want its residents to rent homes rather than own them. So it seems! Few Los Angelesians are going to own their own homes giving these gloomy statistics.
Unsurprisingly, apartments are the new market for real estate agents prowling the streets of Los Angeles. Real estate firm Douglas Elliman’s latest market reports show that apartment vacancy rates have fallen to 2.7 percent, even in hot development neighborhoods like Downtown LA, while more than 5,200 new rentals have come online in LA, and 2,700 of those were in the Downtown district. There are now more than 15,000 units under construction through 2017 and Marcus & Millichap say that every section of town will receive more than 1,000 units in 2016.
Here’s a breakdown of Los Angeles area by area so you can see how the real estate field lies.
1. San Fernando Valley
- Rents are up an average of 7.4 percent.
- Average asking rent price in the Northeast Valley is up 15.1 percent, coming in at $1,438 per month. Other areas in the Valley experienced smaller increases in average rents: the Burbank/Glendale/Pasadena area saw a 6.8 percent increase, to $2,016 per month, and the Sherman Oaks/North Hollywood/Encino markets experienced a 9.5 percent increase to $1,503 per month.
- In the last 12 months, only about 980 new rental units were added to Valley’s stock, down from 2,250 the year before. 2016 should see an increase in new apartments though, as 3,100 are expected to be added to the market next year.
2. Central Los Angeles (Downtown, Hollywood, Mid-Wilshire
- Rents in Central LA were up 6.2 percent on average over the past year
- Downtown rents were up only 5.3 percent to an average of $2,158 per month. 2,800 new rental units were built in Central LA during the last year
- Vacancy rates in Downtown came in at 3.7 percent compared to Hollywood’s 2.6 percent. As a result Downtown offered concessions on more than 10 percent of units to entice renters to sign a lease.
3. Westside Los Angeles
- Rents were up 6.8 percent in the last quarter averaging $2,750 per month.
- Average rents in Santa Monica/Marina Del Rey climbed above $3,000 for the first time ever, up 6.0 percent to hit $3,132 per month.
- Only 460 new apartments were built on the Westside during the past year, with nearly half of those being built in and around Santa Monica
- 2016 will see the completion of more than 1,000 new rental units in the area, with more than 700 of them built in Santa Monica and Marina Del Rey.
4. South Bay of Los Angeles
- Rents along LA’s southern coast increased to 8.8 percent.
- Beach rents increased 8.7 percent to an average of $1,620 per month.
- 950 new units were added to the rental market during the past year
- More than 820 of those rentals qualified as affordable housing.
The bottom line is this…
The Los Angeles housing market is hitting record levels of craziness with ever-rising housing – and rental – prices discouraging people from buying. The number of sales stays flat as prices rise. This doesn’t mean that agents have a rough time and are doomed to poverty. On the contrary, if you are a real estate agent in LA, you may want on focus on apartments and on rentals since these seem to be in demand.
Sellers, also, have a booming-for-sale market where everything is busting record high from condos and single-family houses to sales closed. Otherwise, you may want to focus on persuading people to live in baskets…