Los Angeles rents have been growing steadily in the last three years, but “more haste, less speed” seems to be the name of the game. According to Yardi Matrix apartment data, the average rent went from just under $1,800 in January 2014 to $2,173 in December 2016, but it’s as if the line was drawn with a ruler—there haven’t been any significant spikes or downturns that could have swung things out of balance.
The same, however, cannot be said about a number of other significant cities in the LA-area, where the average rent has increased by up to 19.7% year-over-year.
Despite the low value of money on the Los Angeles rental market, and LA being in the top 10 most expensive ones nationally, there are quite a few smaller but more competitive cities in its immediate vicinity. In fact, most of its neighbors far outpaced it last year in terms of rent growth, and some of them even boast average rents that leave LA proper’s $2,173 in the dust.
We have analyzed rent evolution in Los Angeles and 46 other significant LA County cities south of the Angeles National Forest, and it looks like 26 of them had larger proportional rent growth than the city itself. Some of them just slightly, like Whittier (5.8%), but cities such as Inglewood, Alhambra, Hacienda Heights, Hawthorne and Gardena posted staggering 10%+ increases in a matter of 12 months. And although marked with a subtle orange, Long Beach is also up there with the crème de la crème when it comes to rent growth—what makes it interesting, is that its 9% year-over-year increase means Long Beach renters paid the equivalent of 13 months of rent in 2016, compared to the previous year.
Outstanding rent growth—Inglewood outperformed them all in 2016
Yes, some of these cities really had no shame last year. Inglewood was the biggest shocker of them all, surprising renters with a rent growth just shy of 20%—renters paid on average one fifth more last year, compared to the 2015 total. The stadium that is under construction for the Rams and the Chargers has already brought a number of high-paying jobs to the area, and it is expected to create even more opportunities after it opens its gates, giving a much anticipated boost to the area’s economy. The vacancy rate is already quite low, and the fact that no new units came online last year mean even less bargaining power for renters.
Thus, it’s no coincidence that rents are skyrocketing in other inland cities of the South Bay too, such as Hawthorne and Gardena, which experienced increases of 11.7% and 10.8%, respectively.
Santa Monica at the tail end, but not for long
If the top of the list was not what you expected, the other end must seem even more surprising. How come Santa Monica had negative rent growth—and quite a serious one at that—, right? Before we take pity on the landlords of the most expensive LA-area apartment market though, it’s worth mentioning that celebrity-magnet high-rise The Champagne Towers at 1221 Ocean Avenue exited the market temporarily due to a multimillion-dollar renovation in 2015. All of its units being top-notch ultra-luxury apartments, this meant the average rent dropped tens of dollars, practically overnight. But don’t worry, as soon as the building comes back online, everything goes back to normal. In fact, we’ll most likely see a huge spike, but at least we’ll know the cause and won’t freak out.
Renters in Agoura Hills and Pico Rivera had a quiet year, free of rent increases. In fact, both cities posted negative rent growth, just not nearly as drastic as in the case of Santa Monica. Out of our selection, a total of 17 cities came behind Los Angeles in spite of having positive y-o-y rent growth, including Burbank (5.5%), San Gabriel (4.2%) and Pasadena (3.2%).
Despite slower growth, some fancy suburbs still beat the City’s rents
Although Marina Del Rey, Hermosa Beach, Pasadena and Redondo Beach had slower rent growth last year than LA proper—not to mention Santa Monica and Agoura Hills, where the average rent went into a nosedive—, they still boast average rents that throw Los Angeles all the way back to the end of the top 10. The oceanfront might have something to do with the high average as well as the stable growth in some of these, though.
Speaking of sky-high rents, you may have expected Beverly Hills to be on the top of the list, and as rents in some cases even reach $14,000 per month here, it’s a perfectly legitimate assumption. And indeed, Beverly Hills remains the most expensive place to live in the LA-area, but given that most of its rentals are located in mid-size apartment buildings or single family homes, Yardi Matrix catalogs a sample too small and too focused to be representative in calculating the average rent (as the database includes rentals in 50+ unit buildings exclusively).
See where your city stands when it comes to rent growth and average rent prices by checking out this table:
|% Change Y-o-Y||Units Delivered|
|Rancho Palos Verdes||$2,589||$2,435||6.3%||-|
|Marina Del Rey||$3,213||$3,087||4.1%||-|
|Santa Fe Springs||$1,561||$1,504||3.8%||-|
Los Angeles—Benchwarmer on home turf, top player in the Nationals
We may have said earlier that LA is cooling off, but it’s good to know that it depends on where you view it from. Compared to the feverish appreciation of the up-and-coming cities in its neighborhood, sure, it’s as cool as a cucumber. Put it next to the national average, though, and you’ll see a huge difference, and more importantly, a difference that has been increasing constantly for at least the past 36 months. The national average has grown by 4% last year to $1,210, while LA posted a 5.7% growth in the same period—not much by local standards, but enough to widen the gap to $1,000 within a couple of months if the trend continues.
The Hottest Neighborhoods in Los Angeles
To give you an idea what added up to this 5.7% year-over-year increase in LA proper, we set up the top 10 list of the Los Angeles neighborhoods that had the highest rent growths. Boyle Heights is the undisputed champion, although renters there might disagree on calling this 25% increase a win of any sort—the opening of the opulent luxury student housing community Currie Hall is clearly one of the reasons that rent growth has hit such a high rate in this neighborhood. Runner-up Harbor City‘s case is very similar, where the 204-unit Solimar community came online in last year. Hollywood Hills is another example where large apartment communities make up a significant portion of the rental inventory, and whenever large communities like Toluca Hills Apartments by Avalon adjust their rents, it has a visible impact on the average rent.
Highland Park is another interesting case, where the Marmion Royal community has surprised its tenants with a sudden rent increase, after a comprehensive renovation. According to LA Times, this move resulted in protests, followed by forced evictions.
In terms of average rent, University Park is leading the pack, followed by Playa Vista and Beverly Grove. See the top 10 most expensive LA neighborhoods in the following interactive table:
|#||Neighborhood||Average Rent 2016||Change Y-o-Y|
|10||Hollywood Hills West||$2,712||6.7%|
In spite of all these, LA proper’s 5.7% year-over-year rent growth is a very moderate rate, especially when you compare it to the surrounding cities. This overall moderation of the Los Angeles rents is in part attributable to the 3,900 multifamily units that came online during last year, but as you can see, there are other signs that suggest that the core is cooling off, while suburbs experience more growth. And the fact that most of the LA area cities are getting more and more popular suggests that the relatively sluggish rent growth in the main city is here to stay for a while, and even a slight relapse no longer seems far-fetched.
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