Rent prices in most neighborhoods across L.A. increased in 2015, which may help to explain why more than half of Angelenos seem to be struggling to pay rent.
The real estate website Zumper analyzed rental prices across L.A. over 2015 and found that overall there was an 11.6% increase for a one bedroom apartment, a trend that we saw earlier in the year as well. And while the majority of neighborhoods saw price increases, a few actually saw a drop. Zumper created a map that breaks down how much of an increase or decrease each neighborhood experienced on average.
The neighborhoods that saw the biggest spikes for 2015 included Santa Monica (+17%), Downtown LA (15.7%), and Westwood (+15%), while areas like Westchester, LaderaHeights, and Congress North also saw an above 15% increase. There were also slight increases (5 to 10%) in places like Echo Park, Koreatown and Venice.
The four neighborhoods that saw a drop in price were, surprisingly to most, the following: Pacific Palisades dropped 7.2%, though it’s still the 12th most expensive hood in the city with the average price of a one bedroom going for $2,320. Bel Air/Beverly Crest saw a decrease of 11.5%, reaching $2,300 for a one bedroom. Culver City saw a dip of 5.2% to $1,930, and Hollywood Hills West dropped 2.2% to $1,820.
Neighborhoods that stayed, more or less, the same, or had a slight increase of about 5%, included Mar Vista, Marina Del Rey, South Robertson and West Adams. And while most of L.A. saw increases, Zumper reports that the City is still slightly more affordable for a one-bedroom setup than are most other cities.
How do L.A’s housing prices compare to those of other locations?
Zumper rated San Francisco as the most expensive rental market in the country with a medium peak of $3,670 for a one bedroom by the end of the year.
New York City took second place at $3,240 for a one bedroom.
Boston’s rent prices for one-bedrooms fluctuated finally settling at $2,380 at the end of 2015.
Oakland, for the first time, became the 4th most expensive rental market in the country, surpassing earlier records of San Jose being so.
Zumper ranked L.A in 8th place – not a bad record. (Meanwhile, Oakland rent growth continues to outpace San Francisco in percentage terms).
Rents across the country: 2015 in review
This past year saw rents increase across the vast majority of urban areas.
The largest increases in 2015 included Oakland that grew by more than 19%; Phoenix by more than 15.4%; Long Beach exceeded14.3%. Then you had Sacramento that hooked itself up to14.1% and, perhaps surprisingly, Baltimore that increased its rent to13.6%.
Other states treated their residents better and dipped their prices. These states included Cleveland that dipped to minus10.3%; Louisville lowered its rates to 6.7%; Columbus, OH achieved a 6%. Philadelphia followed suit by-5.3%. This was followed by Minneapolis at 4.8%. And finally Albuquerque at 4.8%.
Los Angles sandwiched itself in the middle.
Other realty statistics of 2015…
The overall population of renters increased (both young and old), vacancy rates dropped to new lows, and new construction in many urban areas failed to satisfy demand.
In short, Los Angeles experienced an 11.6% appreciation in the year with major appreciation in price in prime areas.
Los Angeles KPCC radio quoted Matt Schwartz, president and chief executive of the California Housing Partnership, who calculated that Los Angelesians have to make at least $33 an hour – $68,640 a year – to be able to afford the average apartment in Los Angeles County. That’s more than double the minimum wage proposed by proposed by Mayor Eric Garcetti, who is trying to vie workers to live here. Garcetti’s minimum wage, by the way, is $13 per hour – far les than in major cities such as Chicago, New York, Washington, and Boston.
Schwartz’s caluclain of the $33 an hour figure is based on the average L.A. County apartment rental price of $1,716 a month, from USC’s 2014 Casden Multifamily. Forecast. An apartment is considered affordable when you spend no more than 30 percent of your paycheck on rent. The majority of Los Angelesians spend as much as 47% if not more of their income on rent, which is the highest percentage in the nation, according to UCLA’s Ziman Center for Real Estate. Many reports show that a significant amount of renters skimp on necessities such as food and health to maintain their rent.
To earn $33 an hour you need a job in one of the following industries:
- Marketing manager: $66,538 ( average in L.A., according to Payscale.com)
- LAUSD teacher: $70,000 (average salary, according to LAUSD )
- Software engineer: $82,669 (average according to Payscale.com)
- Lawyer: $104,249 (average according to Payscale.com)
Few residents, obviously, can get such jobs. Most have to settle for occupations that typically earn far below the $33 an hour threshold in L.A. County, according to the California Housing Partnership.
What about buying a home?
In order to afford to purchase the median-priced home in Los Angeles, you’d need to earn $96,513 a year, according to HSH.com, a mortgage information website.
Either way, you’re in a pickle.
Some seek to get out of their pickle by requisitioning the banks. Most are turned away. Those who agree to take the risk turn to commercial hard money lenders. Private hard money lenders in Los Angeles focus on value of property rather than on credit rating so there’s less chance that the borrower will be refused. On the other hand, there’s the hefty interest payment (far heftier than with traditional mortgages) and the multiplied chance of losing your home (and becoming poorer) if you’re unable to fulfill your debt.
Caught between a rock and a hard place, most renters in LA can only sit tight and wonder what 2016 has in store for them.