Rents are finally falling in Los Angeles. But it's still not enough for many (2024)

FAQs

Are rents finally falling in Los Angeles? ›

Rents in Los Angeles have dropped 3% over the past year, marking the sharpest decline of any major city in California, according to a new report from the nonprofit news outlet Crosstown L.A.

(NerdWallet) – An ongoing boom in apartment construction has helped slow down rental inflation — but renters shouldn't expect prices to drop dramatically from their pandemic-padded highs. That means affordability will remain the dominant narrative in rental housing in 2024.

The average rent for apartments in Los Angeles, CA, is between $2,174 and $3,790 in 2024.

While recessions can create downward pressure on rental rates due to decreased demand and financial hardships tenants face, the extent of the decrease and its duration can vary depending on location, market conditions, and government interventions.

RSO Rent Increase

Annual rent increases for rental units subject to the City of Los Angeles Rent Stabilization Ordinance (RSO) are prohibited through January 31, 2024. The City Council approved a 4% rent increase for properties subject to the RSO from February 1, 2024 through June 30, 2024.

Los Angeles Housing Market Trends

In April 2024, Los Angeles home prices were up 12.5% compared to last year, selling for a median price of $1.0M. On average, homes in Los Angeles sell after 40 days on the market compared to 41 days last year. There were 1,640 homes sold in April this year, up from 1,459 last year.

That being said, there are still far more buyers than sellers even with this negative first-time homebuyer news, meaning that there will not be a market crash likely. According to MCT housing market experts and other experts in the field, the likelihood of a real estate housing market crash in 2024 is low.

What is the average rent in Los Angeles, CA? As of June 2024, the average rent in Los Angeles, CA is $2,105 per month. This is 39% higher than the national average rent price of $1,517/month, making Los Angeles one of the most expensive cities in the US.

Landlords are allowed to raise rent by a maximum of 10% every 12 months. That means if the CPI change is above 5%, the maximum increase caps at 10%. It's vital to understand, however, that the actual amount you can raise rent depends largely on your local city laws.

Chart shows turbulent rent prices in Los Angeles which dropped most in 2020, then rose in 2021 and are now falling again.

What percent of LA rents? ›

1: Los Angeles, CA Rent Statistics: An Overview

According to the US Census, 63% of housing units in the city of Los Angeles are renter-occupied. In May 2023, the average apartment rent price in Los Angeles, CA was $2,784.

As a result, the owners of rental properties can continue to depend on steady rental income if a recession occurs because the demand for rental properties will be high. The only thing which could impede your rental income flow is if you have tenants who cannot pay their rent due to layoffs and harsh economic times.

According to MPF Research, nominal rents for large invest- ment-grade apartment properties slipped 0.3 percent in 2008 and then dropped 4.1 percent in 2009—both declines outpacing the change in overall prices.

A recession can impact the housing market in several ways. Typically, buyer demand weakens due to economic uncertainty, potentially leading to price drops or mortgage rates typically drop. However, the current situation is unique, with already high interest rates and low housing inventory.

Meanwhile, California's 5.3 percent unemployment rate is 1 percentage point higher than the national rate, contributing to a struggling rental market in the state, according to Zumper. The challenging jobs market could mean that rental prices in cities in California may continue to fall going forward.

“We have had essentially no new supply of apartments until quite recently so vacancy rates are very low, and that gives landlords a lot of pricing power so they can push rents, and they have to the point where they're beyond record levels.”

The Los Angeles housing crisis has reached epic proportions and continues to deteriorate. The city, according to a study by the federal housing agency Freddie Mac, is short 400,000 homes with an estimate of over 75,000 homeless in L.A. County and over 46,000 in LA, a rise of 10% last year.