L.A. Apartment Vacancy Is Up, But Renters Aren’t Leaving the City

Overall, the pandemic has accelerated migration from major metros into more affordable secondary markets—but recent data from Apartment List shows that there has yet to be a significant exodus out of Los Angeles. The city has a growing vacancy rate and decreasing rents, but so far, renters seem to be moving to more affordable areas within the city rater than exiting.

“At the metro level, our search data does not indicate that there has been a significant increase in the share of L.A. residents looking to leave the metro. We have found a trend of rents falling fastest in the urban core, while many surrounding suburbs are seeing more modest declines or even slight increases in rents, so some of the increase in vacancies is likely attributable to renters moving out to the farther reaches of the metro,” Christopher Salviati, housing economist at Apartment List, tells GlobeSt.com.

In addition the market dislocation and job loss has likely led to the consolidation of households. “Increased financial hardship has likely forced some to move in with family or friends to mitigate housing costs,” says Salviati. “I believe these factors are all at play, but it’s a bit difficult to disentangle the relative magnitude of each.”

Overall, the urban core is seeing the weakest demand and most significant decline in rental rates. “Remote work has significantly lessened the need to be close to downtown, and many of the other perks of city living, like bars, restaurants, museums, are temporarily shuttered,” says Salviati. “At the same time, having extra space has taken on increased value, and the economic impacts of the pandemic have put new financial strain on many households.”

These two trends have driven people away from apartments that are traditionally higher in price. “These factors seem to have led to a shift away from high-priced urban rentals toward mid-sized markets and suburbs where renters can get a bit more for a bit less,” adds Salviati.

And although there is no significant evidence of exodus from Los Angeles, there has been an overall trend of movement out of major metros and into secondary markets, most commonly in the sunbelt. This trend could have a longer term impact on Los Angeles apartment demand. “These has been anecdotal evidence of renters moving to more affordable markets where they can afford to purchase homes, which we would not capture in our data, so there has likely been some movement out of the market,” says Salviati.