Los Angeles, or the City of Angels, appears to have it all. In addition to its abundance of sunny days (only 35 days of precipitation a year!), L.A. boasts a strong and healthy business and international trade sector. The city is a main hub for the entertainment industry and is also known for its strengths in technology, fashion, sports, and medicine, to name a few.
Los Angeles is the 2nd most populous city in the US, with an estimated 3.9 million residents. The city is very diverse, with several ethnic hubs, including Chinatown, Koreatown, Tehrangeles, and Little Tokyo. Two hundred and twenty four different languages are spoken in the city. Based on the 2010 US census, 57.3 percent of L.A.’s residents live in rental housing.
L.A. Real Estate Market
With home prices increasing a whopping 22 percent from Q3-2012 to Q3-2013, it’s clear the Los Angeles real estate market has rebounded, but many experts are concerned about a bubble. Even so, CoreLogic Case-Shiller predicts that home prices will continue to increase: by 6.8% for Q3-2013 to Q3-2014 and by 4.5% for Q3-2014 to Q3-2015.
However, those predicted increases certainly didn’t happen last month, which was full of surprises for L.A. and California real estate. First, in Los Angeles the number of home sales in January 2014 dropped 86.4 percent from December 2013, and in Southern California, home prices fell 3.8 percent. According to Stuart Gabriel, the director of the Ziman Center for Real Estate at UCLA, “the urgency to buy has essentially evaporated” because prices are too high, and buyers don’t want to overpay.
Second, after 17 months of decreases, California foreclosure starts were up 57% in January. Since it takes an average of 322 days to complete the foreclosure process in California, some experts are suggesting that those dabbling in real estate should expect more housing inventory on the California real estate market at the end of 2014. In other words they’re suggesting that sellers sell now, before those homes are listed.
And here are some other interesting facts about California real estate:
- California home ownership peaked around 2005 at 61 percent. It’s now at about 54.5 percent.
- Surprisingly, 16% of Californians are still underwater in their mortgages.
L.A. Rental Market
Lots of renters + housing shortage = high rents.
It also describes the Los Angeles rental market. According to Trulia, of the 25 largest rental markets, L.A.’s rents increased the most in 2013. The vacancy rate in L.A. county at the end of 2014 was 3.2 percent– reflecting a decrease in the past year of 10.6 percent. The average rent in L.A. County was $1,435 per month.
And it looks like rental prices won’t be coming down any time soon. The USC Casden Multifamily Forecast Report predicts rents increases will continue for at least a year or two because the number of new units being built is not keeping up with demand.
We work with several property management companies in Los Angeles, and we suspect they’re noticing some differences in the rental market between now and say, three years ago. Seems like it’s heaven for rental owners and trying times for renters. Please comment!
By Tracey March