The extreme multifamily rent growth in Los Angeles is beginning to slow, and while rent growth is still substantial, we couldn't help but wonder how the deceleration of growth is impacting vacancy rates. It stands to reason—especially considering that L.A. has been pegged as a city with a severe housing shortage—that vacancy rates would decline in response. We asked Richard Green, director of the USC Luck Center, how the slowed rental rate growth is expected to impact vacancy rates, and he pondered the idea that we may be hitting a supply equilibrium.

“It is like we are getting an equilibrium, which is to say that neither vacancy rates nor rents will move that much,” Green tells GlobeSt.com. “It confuses me a little bit because we are still not building all that much, especially relative to where we expect demand to be. It could be that there is not as much demand as we thought there was going to be.”

Population growth—which had been expected to grow rapidly over the next decade—is actually slowing. Green says that since the last census, Los Angeles County has grown by approximately 50,000 residents, which would translate to a need for 20,000 new housing units each year. We are currently building 25,000 new housing units per year. “It could be that population growth is slowing enough—and rents may be a reason for that—that we are at a point where we building enough product as there is demand for new product,” he adds. “That hasn't been true for a long time. We went from 2008 to 2014 not building much of anything, and now we are building 25,000 units per year.”