Was looking at a deal in the Valley yesterday, was surprised by the rents, and came to a realization about apartment supply.
The reason that I was surprised by the rents is that I’m used to thinking of the Valley as having considerably more supply than the city. There’s physically just a ton of land there.
So I was shocked to see 1/1s going for upwards of $2000 in the south Valley… that’s like Silver Lake.
Here is what I think is going on:
- While there is a lot of land in the south Valley, almost all of it is zoned R1
- The main places where density is permitted is along the main commercial commercial drags (Riverside, Laurel Canyon, Cahuenga, etc.)
- Those streets were mostly built-out in the 1960s, so the buildings are rent-controlled
- If you want to rip down an existing RSO building to build a new one, the new building will be rent controlled
The net result of all of this is that supply is actually highly constrained in the south Valley.