Los Angeles Apartment Rents Have Grown 14% in 2021

Los Angeles apartment rents have swiftly recovered from the pandemic. The latest report from Apartment List reveals that rents have increased 14.1% this year and 4.2% since the start of the pandemic in March 2020. The recovery is notable considering that rents in the metro fell 9.6% in 2020 as a result of the pandemic.

“Last year, the pandemic created many apartment vacancies across L.A., pushing prices down as properties had more difficulty finding tenants. This year, the opposite has been true,” Rob Warnock, senior research associate at Apartment List, tells GlobeSt.com. “Over the last 12 months, the vacancy rate in L.A. has more than halved, from 8.4% to 4%. This means the market is becoming increasingly competitive, giving landlords the opportunity to raise their prices.” Los Angeles rent growth has been on par with the national numbers. In November, rents in the metro and the nation both increased .1%, and Los Angeles is ranked 63es for apartment rent growth among the top 100 cities.

Before the pandemic, rent growth has stagnated in the market with little to no growth each month, but the pandemic jump-started double-digit rent growth once again. “The pandemic has contributed to worsening housing affordability in many ways,” says Warnock. “From disrupting supply chains that drive up the cost of labor and housing materials, to encouraging new migration to smaller suburban markets, to exacerbating wage inequality, COVID-19 created an environment for rapid price growth in 2021.”

Los Angeles is one of only a handful of cities with an eviction moratorium in effect, which many owners have berated as a means for tenants to shirk rent payments. The rent growth trend tells a different story, and Warnock says the impact of the regulation is difficult to quantify. “There are many concurrent factors playing a role,” he says. “But in limiting the supply of vacant homes, it certainly has contributed to the tight, expensive market that we see today. It may also have the indirect effect of encouraging landlords to raise prices on new leases in order to offset losses from non-paying tenants. Cities like L.A. have had the difficult task of balancing this outcomes against the alternative: potentially high rates of displacement.”

The rent growth, however, could be a short-term trend. Growth has decelerated in the last month, and Warnock expects pricing to fall during the winter months when apartment demand slows. However, it also doesn’t expect rents to move in the opposite direction. “Softness in the winter will do little to undo the rapid price growth that took place in 2021, and prices will remain high throughout 2022,” he says. “But already we’re seeing vacancy rates creep back up, so if that trend continues price growth could be far more modest than it was throughout this past year.”