Los Angeles rental prices have finally found stable ground after years of dramatic surges. According to a 2018 report by Apartment List, prices are nearly the same as they were at the end of 2017. What does the data say for applicants who had to submit a rental application?
For much of last year, there was a 1.4% marginal rise in price growth, which went above the state average of 0.3%. Moving into the start of 2019, it was found that the city’s median rent price for a one-bedroom apartment was at $1,360, while a typical two-bedroom was at $1,750. And as of last month, both prices have barely budged.
While this doesn’t exactly equate to more affordable living, the stable nature means renting will continue to remain a viable option, especially since renting is more common than buying in a place like Los Angeles. But how does the LA rental market fare compared to other popular locations?
Los Angeles vs. other major cities
Seattle is usually known for its crazy costs. But for the first time in years, not only did rent pricing not increase, it even showed signs of decline. While the past two years have exhibited a 5.4% growth, the differences between the consecutive increase and decrease shows a 2.4% yearly reduction. Zillow economist Aaron Terrazas explains that the post-market crash boom in multifamily building is finally catching up. This, coupled with new units adding to the supply of Seattle rentals and the ease of submitting a rental application, is also causing more millennials to enter the rental market, leading to more demand for rentals.
2018 saw a significant dip in Manhattan prices. On top of this, 2019 welcomed an increase in available apartments. However, most are on the luxury end, and it is predicted that it will take more than half a decade to sell out all new developments in Manhattan alone. A feature on buying new NYC developments by Yoreevo lists the additional expenses that come with buying new developments, including closing costs and transfer taxes. Because of this, people are driven to rent instead, or to shift focus to apartments with declining costs carrying over from the previous year.
People moving out of California
Despite California being a hot commodity, a study published on the Legislative Analyst’s Office concluded that there are more people moving out of the state than in, and Los Angeles is not exempt. It can be attributed to high housing costs that are causing residents to look for more affordable living areas. The analysis shows that some of the top urban locations where LA citizens are submitting rental applications to include San Francisco, San Diego, Las Vegas, Phoenix, and Dallas.
Yahoo Finance writer Amanda Fung describes Las Vegas as one of the hottest housing markets of 2018 based on home price growth. No longer just a place to party, it has attracted people who want to settle down in an area with a lower cost of living. Even if home prices have climbed significantly, it’s still far cheaper than most parts of southern California. While Los Angeles’ median home price was at $628,900 in the third quarter, Vegas’ was $294,600. Although Las Vegas might offer lower housing prices, these come with some trade-offs, like less accessibility for high-paying jobs.
For those with more spending power, San Francisco continues to be an attractive prospect. The current median rent is $3,560 per month — the highest in the whole country, with New York and Los Angeles not far behind. However, if you’re comparing the affordability of rental units to the common paycheck, The Mercury News claims San Francisco fares much better than Los Angeles. In 2017, the median renter household income was at $92,123 — almost 2.4 times the national average. However, it’s also important to note that this high accessibility rate is influenced by the 60% share of rent-controlled units. Applying the same math to LA’s rental market, Los Angeles clocks in at a mere 23% of affordable rentals.