Will Los Angeles Rent Go Down? - An Expert's Perspective

California, of all places, could provide some indication that the housing rental market is cooling. For Los Angeles, year-on-year rent growth peaked in April at 22%, Ratiu said. Since then, the region has experienced a dramatic slowdown in rent growth, with prices in July up 4% from the previous year. In California, a new report shows that the most expensive cities for renters are not in Los Angeles or San Francisco.

The San Diego, San Jose and Bay Area regions, the country's three most expensive metropolitan areas, continued to see increases in July, but rates in California are encouraging, Ratiu said. Nationwide, the pinch is being felt in big cities, which saw an exodus of tenants at the start of the pandemic, as well as in the suburbs. Clean energy is booming and not all rural communities are embracing it. Signs of the slowdown observed in California are already being hinted at in the national numbers.

Rent increases in California peaked faster and fell earlier than in other parts of the country, Ratiu said. Christian Martinez is a Metro reporter who covers breaking news in the Los Angeles Times. He previously wrote for the USA Today newspaper network, including Ventura County Star, where he covered the Thomas and Woolsey wildfires and the Borderline mass shooting, the Spectrum %26 Daily News in Utah, and the Lansing State Journal in Michigan. He was born and raised in Southern California and attended Saint Mary's College of California.

The Los Angeles housing market is considered one of the main markets for both investors and homeowners. Tight supply and consistent demand from homebuyers have boosted home values across the greater Los Angeles area. The Los Angeles metropolitan area saw a -35.9% year-on-year decline in sales of existing single-family homes. Using this methodology, Los Angeles County home values have appreciated by nearly 135% over the past decade (since August 2011).

So is buying Los Angeles real estate cheaply and renting it out in a market hungry for affordable rental units? After a two-year housing boom driven largely by low borrowing costs, the Los Angeles housing market is cooling. While home prices in Los Angeles may be rising slightly over the next year, the fact is that there are plenty of homes available at fair prices. House Prices Up 4.9% in Los Angeles County, 3.7% in Orange County, and 5% in Inland Empire. Los Angeles home prices are well below the national average for all cities and towns in the United States.

The neighborhood is in the midst of a renaissance, making it an affordable alternative for young professionals outside of downtown Los Angeles. The sale-to-list price ratio was 100.3%, meaning that homes in Los Angeles sold approximately at the average sales price. Good cash flow from Los Angeles investment properties means the investment is, needless to say, profitable. Affordability is a big problem in Los Angeles County, as nearly three out of four residents can't afford a mid-priced home in the area.

The report pointed to low mortgage rates as yet another reason for the decline in demand, as many Los Angeles renters jumped into homeownership. Strong market fundamentals make the Los Angeles real estate market a good place to invest if you're looking to buy real estate in California.

Lester Linch
Lester Linch

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