Are rents sustainable?

One of my agents was in my office yesterday wondering whether current rents are sustainable.

She happens to be looking for a new apartment and can’t believe 1/1s are going for $1350 in City Terrace.

In my opinion, rents are very sustainable and, if anything, likely to increase. Why?

During the Great Recession, tons and tons of prime-age renters were unable to find work and were therefore forced to live with their parents. Here’s a chart:

%age of kids living with parents

 

I’m not expert on Millenials (I’m 35, but act like I’m 123), but my guess is that, as the economy continues to improve, young people are going to want to move out of their parents homes and into their own. Seems reasonable to expect the rate reflected in the chart above to drop back down to its historical average of 26-27% (from 30-31%).

More young people moving out on their own means more renters. And that means more demand in a city where it’s very, very difficult to add more housing.

So I think we’re going to continue to see upward pressure on rents for the foreseeable future.

University Park Rent Survery

Today, we’re looking at rents in the USC University Park area. It’s an older neighborhood, centered on the University, with loads of old Victorian and Craftsmen homes in various states of repair.

Situated between downtown and South Los Angeles, there is easy access to the 110 and 10 freeways and the Expo Metro line.

Given the proximity to campus, much of the rental housing is geared towards students, pushing rents higher than usual for an area where the median income is under $20,000. Unlike many of the other neighborhoods surveyed recently, there is quite a bit of inventory, albeit at much higher prices.

Here are the highlights of our survey:

  • Median asking rent for one bed / one bath units was $1395 / month
  • Median asking rent for two bed units was $1900 / month.
  • Median asking for three bed /on bath units was $2,200 (the sole 3/3 unit was listed for $3,000)

Aspiring landlords in the area ought to remember that renting to students is not like being a normal landlord. You end up dealing with turn-over every year, loads of wear-and-tear on the assets, and rent collection issues. My strong advice if you’re thinking of becoming a student housing landlord is to get the parents to co-sign all leases and collect very large security deposits. Consider yourself warned!

The fine print: For our rent survey, we looked at apartments for rent in the area defined as USC University Park by the LA Times neighborhood mapping project. Here’s the raw data: University Park Rent Survey 3-12 (1) 

Studio City Rent Survey – December 2012

You wouldn’t think it, but there are definitely people out there looking for apartments right now (my property management company closed two leases yesterday, with one more signing today).

So, we figured we’d continue our surveys of asking rents in different parts of LA, this time by taking a look at Studio City in the Valley. Here are the numbers:

  • Just two studio apartments available, at $850 and $1685 (the second one hardly qualifies as a studio!)
  • Median for 1b/1b units is $1299, ranging from $1195 to $2096
  • Median for 2b/1-2b units is $1795, ranging from $1495 to $2500
  • Nine 3 bedroom units are available with a median of $3600, ranging from as low as $2200 up to $3980

A few other interesting things to note:

  • Almost all units in the survey come with parking, which is pretty normal for the Valley but a stark contrast with older areas like Silver Lake and Echo Park;
  • At the higher end of the price ranges for each unit type, most of the units are in larger buildings with pools;
  • The most expensive listing we found was for a 6 bd / 5.5 ba house, at $8500. At that rent, don’t you just buy?

The fine print: Our survey was based on a search of the apartment listings on Craigslist for units located in Studio City on December 21, 2012. We only included listings where an address was available and the property fell within the boundaries of Studio City as defined by the LA Times neighborhood mapping project. For the raw data, click here: Studio City Rent Survey – 12.21.2012.

West Hollywood Rent Survey – November 2012

This week, we’re looking at rents in West Hollywood. Keep in mind that West Hollywood is its own city, separate from Los Angeles and with its own rent-control law. Also, West Hollywood has historically had a fairly progressive view on development, meaning that the city is dense and there are lots of apartments.

All of that said, let’s check the rents for November 2012:

  • Median rent for a studio apartment was $1225 / month, with 50% of the units having parking
  • Median rent for 1 bed / 1 bath apartments was $1599. There was quite a range – the cheapest 1/1 was $1195 and the most expensive was $3550;
  • Median rent for a 2 bed / 1 bath was $1900. Supply was limited, with only nine units on the market when we checked.
  • Median rent for 2 bed / 2 bath was $2298. Almost all units had parking and there were plenty to choose from, with 34 units on the market
  • Finally, for families, there were five 3 bed / 2 bath units on the market with a median rent of $3200.

The fine print: Our survey was based on a search of Craigslist apartment listings using the keyword “West Hollywood” on 11/4-5/2012. We checked all addresses to ensure the units were in West Hollywood (as defined by the LA Times neighborhood mapping project); any units without an address specified were removed from the survey. For the raw data, click here: Final West Hollywood Rent Survey – Nov. 2012

North Hollywood Rent Survey – October 2012

This month, we’re taking a look at North Hollywood rents, mostly because I’m curious about why people are paying such high prices to buy apartment buildings there.

A few things to keep in mind:

  • North Hollywood is huge; there are way more apartments there than in other neighborhoods we’ve looked at previously, so the numbers are more statistically significant
  • Because the Valley was developed relatively recently, almost every unit has parking
  • Generally, the closer a unit is to the Hollywood Hills, the more expensive it is

That said, here are the highlights of our survey:

  • Very few true studios were available. Median rent for studios was $822 / month
  • Median asking rent for one bed / one bath units was $1110 / month
  • Median asking rent for two beds with fewer than two full baths was $1300 / month
  • Median asking for two bed / two baths was $2095 (driven by a lot of vacancy at the very top of the range)

If you’re interested in renting in North Hollywood, it might be worth checking out the NoHo Commons, a new building with lots of vacancy. They’re offering loft-style studio units of 800-950 sq ft for prices ranging from $1480-2056. I was going to link to their website, but it’s down (great marketing!). Here are a few listings.

The fine print: Our survey was based on a search of the apartment listings on Craigslist for the words “North Hollywood” on October 18-20, 2012. We only included listings where an address was available and the property fell within the boundaries of North Hollywood as defined by the LA Times neighborhood mapping project. For the raw data, click here: North Hollywood Rent Survey – Oct. 2012