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A 'For Rent' sign stands in front of a house on May 31, 2011 in Chicago, Illinois.
Looking to rent in 2012? Good luck.
A University of Southern California report released Wednesday predicted rents across the Southern California region to rise over the next two years, with rents in Los Angeles County set to rise 7.9 percent over the next year.
The USC Lusk Center for Real Estate’s annual Casden Multifamily Forecast found that rents rose last year in 39 submarkets in Los Angeles, San Diego, Riverside, San Bernardino and Orange counties. Why the surge now, after a trend in lowered rents a few years ago, when only three submarkets in 2009 saw rents rising?
“After a number of years when rents were quite soft in Southern California, what we saw is a lot of people moved into apartments in the last year…so vacancies fell quite dramatically,” said Richard Green, director of the USC Lusk Center. “If you have less of a supply of something and people demanding it, you'll see the price of it go up.”
Right now, the average rent in Los Angeles County is approximately $1,400 for a one-bedroom apartment and $1,800 for a two-bedroom. Green says that the Antelope Valley is the cheapest place to rent (a two-bedroom is about $830 a month), and West L.A. is the most expensive (a two-bedroom is about $2,900 a month).
Fewer homes on the market and decreased construction have also been cited as reasons. At the same time, data tracker CoreLogic released a report this week predicting that bought-up foreclosed homes converted into rentals will turn into a booming market, and could be worth more than $100 billion this year.
“A couple of things are happening. The occupancy rate is very high, 96 percent of apartments in L.A. County are currently occupied. We aren't building a whole lot of stuff… At the same time we have a number of people who have been foreclosed on and have to leave their houses, they're moving into the apartment market,” said Green. “You put all that together and we think that rents are going to continue to rise for a while.”
With mortgage buyer Freddie Mac announcing Thursday that the average rate on the 30-year fixed mortgage fell near its all-time low this week, from 3.98 percent to 3.88 percent, and the 15-year mortgage down from 3.21 percent to 3.11 percent, buying a home and refinancing is better than ever right now.
Are you looking to rent in Southern California and having a hard time? Would you consider buying instead of renting, given lowered mortgage rates? What about snatching up foreclosed homes to turn around as rentals?
Richard Green, director of the USC Lusk Center for Real Estate
Brad Keyes, real estate attorney and broker who deals in commercial and residential real estate in Los Angeles