How the pandemic has affected renting in a typically exclusive market
Imagine someone spending their quarantine for months away from the sprawling metropolis that is Los Angeles. Upon return, you can see how they might be shocked by the sight of something never seen in Los Angeles. “For Rent” signs. Everywhere. In Los Feliz, a neighborhood usually known for its limited and exclusive rental availability it is now common to see about five “For Rent” signs per block. So what’s happening?
People are leaving LA. In droves. Whether they are losing their jobs, want to get away from the viral epicenter, or simply are taking the virus as the sign they needed to begin again it is clear that Los Angeles is becoming amazingly less populated.
Another first is seeing rental incentives like “One Month Free Rent!” or “No Deposit Required!” Landlords and property management companies were having a sale and for the first time in 10 years rents began to decrease in Los Angeles. So what does this mean?
Los Angeles is kind of affordable now
LA has a history of exclusivity and difficulty when it comes to renting. This article details that the city still needs about a half a million homes to meet low income demands county wide. But central metropolitan LA, (Santa Monica, Sherman Oaks, Hollywood, Silverlake), is not low income. And this is where you are seeing the most for rent signs. So there may be a shortage in the greater suburban LA but the usual housing hotspots are showing the biggest decline in rent prices. It’s a bit of a give and take.
You might be able to move into your dream neighborhood
Many people from the outskirts of the city moved into Central LA with great ease which is not typical. Some can spend up to 4 months or more in sublets before snagging their “forever” apartment. People are also upgrading by taking advantage of rental incentives and moving into higher end apartment complexes. LA’s long history of competition for apartments has been flipped upside down.
There are more people experiencing homelessness or moving back home
With so many apartments available now you have to wonder where people went. There has been much news coverage on the increasing homeless population and many people report moving back in with their parents/family. The city did enact moratoriums on evictions and offered some programs such as delaying rent payment. For the latter many people found themselves in a grey area of not qualifying and struggling to make ends meet.
People are buying homes
Some have opted to take advantage of the historically low interest rates for loans and buy a small apartment. If someone is in a good position to buy property it is now very much encouraged by industry experts due to the many benefits of home ownership versus renting. An article written by Than Merril of FortuneBuilders.com states,
“In the meantime, Los Angeles real estate market trends point to an exodus from the city. With more and more people working from home, there’s no longer a need for a lot of people to live within proximity to their offices. As a result, we are starting to see people trade expensive city apartments for more spacious suburban homes. While it’s too soon to tell, it’s reasonable to assume we will see less demand for urban living spaces for the foreseeable future. Suburban neighborhoods, on the other hand, may see an uptick in demand, which will ultimately be reflected in rising home values.”
This analysis provides some insight into the increased supply of apartments and homes in metropolitan Los Angeles.
In conclusion, the housing market here in Los Angeles is being stimulated. Prices are up in real estate and lower in rent offering opportunities for different people on different paths making different choices. There are more homeless yet more homes. There is an increase in unemployment but an increase in new talent moving into the city. To put it plainly, things are changing.
For everyone. In the recent weeks there have been less rent incentives and less “For Rent” signs. Perhaps things are beginning to even out and perhaps stability is on the rise.
Todd Pivetti works with The Shelhamer Group in Los Angeles making sure all clients receive world class service in their real estate needs.