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October 18, 2017
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Los Angeles Apartment Rents Up 5.1% Over the Prior Year

8/28/17

The Los Angeles multifamily housing market remains very strong in the second quarter of 2017, according to NAI Capital’s Multifamily Market Outlook. The average asking rent hit its highest level on record at $1,678/unit, up by 5.1% over last year. Average asking rents have consistently grown year over year and are up 32% from their lowest point in recession.

The vacancy rate registered 3.9%, down 30 basis points from the first quarter of 2017 and 20 basis point over last year. With approximately 13,208 new units delivered to the market over the past year, market fundamental indicate the strength of the market. Population and employment growth continue to be the primary drivers of demand for multifamily housing, pushing occupancy rates and asking rents to historic heights. Developers continue to capitalize on this trend, with 32,786 units under construction as of the second quarter and an additional 85,798 new units planned.

The high cost of home ownership in Los Angeles County compounds the supply problem in the rental market. According to the California Association of Realtors, only 29% of residents in Los Angeles County can afford to purchase a home. The median sale price of a single family home hit a new high of $548,220 in June.

According to Vice President, Kevin Kawaoka, CCIM with NAI Capital’ Multifamily Services Group, “In the first half of 2017 we saw many investors sitting on the sidelines in aims of gaining clarity about the political climate and health of the economy. More recently we are seeing their confidence resume and I anticipate that investor demand will continue to respond aggressively to the strong apartment market.”

“Multifamily will continue to benefit from steady job gains which will continue to release pent-up housing demand through the remainder of the year. In addition, hurdles to homeownership will keep many would-be owners in the rental market– and investors view this as low risk for their investment,” Kawaoka added.”





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