Renting an apartment in Los Angeles and Orange counties will be getting more expensive, with a USC Casden Economics Forecast released Thursday predicting continuing rent increases over the next two years.
While Los Angeles is projected to have a relatively moderate rent increase of $100, apartment rents are projected to increase an average of $184 in Orange County, according to the forecast.
The annual report from USC Lusk Center for Real Estate assesses current market conditions and makes two-year projections for multifamily rents and vacancies in Southern California.
Richard Green, director of the Lusk Center, noted that the forecast was somewhat uncertain due to fluctuations in inflation, rising interest rates and relocations.
“The Fed has increased interest rates at a frequency not seen since the end of the Reagan administration,” Green said in a statement.
“While it might slow inflation, rapid rate hikes could have a different impact on housing in Southern California. High interest can be barrier to new housing construction or a renter’s decision to become a homeowner. Both add stress to the rental market and drive up prices.”
The forecast predicts low vacancy rates and monthly rents increasing at least $100 over two years in the two counties. But the report noted that construction of housing in each market is near the lowest levels in the country on a per capita basis. The Los Angeles Metropolitan Area — which includes Orange County — is 70% more populous than both Dallas and Houston, but builds half as much housing as those cities. San Diego performs only slightly better than Los Angeles.
The report also noted that the COVID-19 pandemic spurred relocations, particularly among low-income households, to areas such as the Inland Empire, Las Vegas or Phoenix, areas with more housing construction and lower rents. The trend led to rapid growth in per capita personal income in Los Angeles, the report found.
Los Angeles County has a current average rent of $2,187, with a 3.6% vacancy rate, with the average rent predicted to rise to $2,289 by 2024, with a 4.59% vacancy rate.
With one of the nation’s highest household incomes and only 3% unemployment, Orange County’s average rent is predicted to rise from the current $2,597 to $2,781, with the vacancy rate rising from 3.03% to 4.36% in two years.
