Rents, home sales and house prices are all on the up in L.A. county. But California homeownership still lags behind the national rate as demand outpaces supply, according to a new report by the USC Lusk Center.
The average L.A. County rent hit $1,307 per month in 2015, reflecting a 4.8 percent growth from last year, the report shows. The submarket with the highest rent in the county last year was Coastal Communities-Beverly Hills, which saw a 7 percent increase in rates year over year to $1,648 per month. The lowest priced submarket was South Los Angeles, with an average rent of $822 per month.
Meanwhile, despite the the dramatic uptick in the multifamily construction rate, vacancy rates continue to slowly but surely tighten. Last year, permits increased by whopping 18 percent, and were issued for 17,869 rental units. Inglewood, Gardena and Hawthorne area had the lowest average vacancy rate at 1.5 percent. San Fernando Valley came in at second with 1.9 percent.
Just four of L.A. County’s 12 submarkets saw a decrease in their vacancy rates last year. They were Burbank-Glendale, South L.A., East and West San Gabriel Valley and Koreatown-Mid City.
The report anticipates further growth in demand for multifamily property as more and more millennials move into Los Angeles County.
Meanwhile, Southern California continues to buck the national trend of increasing homeownership rates.
The state’s population has grown faster than the national average, housing 13 percent of all American residents. Yet, in the past two decades, California has only been responsible for 8 percent of all new residential building permits, the report shows.
“At a national level, it is clear that the great apartment bull market that started at the end of the great recession is coming to an end,” Christopher Thornberg, Beacon Economics founding partner, said in a statement. “Local supply constraints combined with solid economic growth implies that the softening will not be experienced locally.”
The report’s forecast for L.A. County in 2018 includes a vacancy rate of 4.1 percent and $1,416 per month for average rent.