Szekely: One of the factors that made such a large proportional change possible is that the average home value was very low to begin with, the lowest in any L.A. zip code at that time. As the city center became more and more desirable, developers have been responding to the demand, and luxury residences as well as a new range of retail options have become available since the turn of the century. But the area—in our case outlined by zip code limits—also includes parts of more dynamically progressing districts, and presents a cross-section of wildly different income levels and property values, which has a considerable influence on the numbers.

GlobeSt.com: How have the increased property values impacted the market?

Szekely: The entire city market has been impacted by the property value increases. Los Angeles is now home to some of the most expensive zip codes in the country, and it's also an expensive city for renters. According to the latest studies, rents have increased by 20.9% in the past 3 years. That's about $400 more in rent per month.

GlobeSt.com: Gentrification obviously creates hardship for low-income residents. What are the ways to balance gentrification while encouraging growth?

Szekely: New developments bring more jobs that theoretically help fight poverty, but if this process happens too fast, the low-income population is displaced before they could start to benefit from the changes. Affordable housing options help level the playing field to a certain degree, but regulating condo conversions and demolitions also helps to establish a sustainable system of checks and balances.

GlobeSt.com: Does gentrification spread to surrounding submarkets as well? Is this a problem that you expect to intensify in the Los Angeles area?

Szekely: Gentrification is present in many areas of South and Southeast L.A. Although, spreading may not be the most appropriate expression to describe the process, as gentrification in general is a more localized phenomenon, only possible in distressed areas of a city by definition. As such, each individual case is unique and needs to be discussed separately. Generally, if there's much room for improvement in a location that suddenly becomes desirable, the process is likely to start and the effects depend in large part on the width of the income gap it creates. With that said, we have noticed some changes in rent trends in the surrounding markets. Cities like Monrovia, Diamond Bar or Palmdale have recorded spectacular year-over-year increases, recording more than 10% increase in rent.

GlobeSt.com: What is your outlook in 2018 for these markets?

Szekely: According to the latest multifamily outlook released by Yardi Matrix, more than 25,000 units are currently underway in the city and a further 88,000 units are in the planning and permitting stages. The report reads, “With the occupancy rate in stabilized properties at 96.4%, development will continue to remain high as housing demand can still quickly absorb new completions. Developers continue to focus on the city's downtown, where more than 6,700 units are being built. Submarkets in Hollywood also have an extensive pipeline: East Hollywood (1,433 units under construction), Hollywood Hills East (1,250), North Hollywood S (411) and West Hollywood (371). Although it has an occupancy rate of 96.3%, East Los Angeles is significantly lagging behind, with a total of only 2,259 units underway.”