L.A. Among Most Rent Burdened Markets

Rent cost burden is worsening across the nation, and Los Angeles is among the top cities where renters spend more than 30% on their income. According to a report from Apartment List, Los Angeles ranks as the sixth nation for rent cost burden with 56.9% of renters spending more than 30% on rent.

“Los Angeles is a desirable place to live with a strong and growing economy, but rental options are not abundant at every price point,” Igor Popov, chief economist at Apartment List, tells GlobeSt.com. “As a result, many renters in the market have been bidding up the price of housing to a point where over half of renters are really stretching their budgets to afford their living space.”

Despite being one of the most rent burdened markets, the cost burden in Los Angeles is decreasing. In 2017, 57.8% of renters were considered cost burdened, a slight decrease from the 2018 numbers. “High-income renters are one of the fastest growing segments in the rental market,” says Popov. “Many young families are earning strong salaries but either don’t want to or can’t afford to purchase a home. As a result, these high-earners are flooding into the rental market and padding the stats a bit. Rents are going up, but the pool of renters is also changing in ways that might mask growing affordability concerns.”

Housing supply is the key to solving the rent burden. “More housing supply will push down rents, and the city can continue to approve new construction to ensure that homes don’t become less affordable for middle-class residents,” says Popov. “With that said, access to below-market-rate units will always be an important source of security for working class households. Finding and approving new space for these units can go a long way towards lowering cost burden.”

Cities are already making strides to alleviate the burden. “In some cases, cities have started to approve more density, either by upzoning or by enabling ADU construction,” explains Popov. “For the most part, though, families have been the ones who have had to find ways to cope with rising housing costs. To this end, we’ve seen household size grow, as families and roommates have been banding together more to form bigger households that can collectively afford rent.”

It isn’t surprising that cities are stepping in. High rents can have a significant impact on the health of the market. “This expense really cuts into peoples’ ability to invest in education, savings, job searches, and a variety of other factors that are important for economic mobility,” says Popov. “Moreover, we’re seeing more and more families flee L.A. in search of more affordable space. This out-migration, over time, can threaten the economic diversity of a city.”