Los Angeles Rents Fall Nearly 7% Since March

Los Angeles rents have decreased nearly 7% since the start of the pandemic, placing the city somewhere in the upper-middle in terms of rent declines. Data from Apartment List shows that rents in Los Angeles have decreased 6.9%, while San Francisco—which leads the nation in rent decrease—rents have fallen 21.7% and the nation have averaged rent decreases of 1.4%.

Rents have fallen in 41 of the 100 largest cities in the country, and coastal markets have been the most susceptible. “The nation’s pricey, coastal markets have significantly cooled off in 2020, and Los Angeles is no exception. Unfortunately, many of the benefits of being in a large city—events, vibrant small business communities, entertainment that brings people together—have been the very things we’ve needed to curb during the pandemic,” Igor Popov, chief economist at Apartment List, tells GlobeSt.com. “At the same time, many incomes have taken a hit, so renters have found themselves looking for cheaper options in more affordable cities, leading to a reduction in demand and rents.”

While 6.9% is a significant decrease in rents, Los Angeles has managed to stave off the double-digit declines of other markets. “Los Angeles is a large and diverse market, which has pockets of affordability and space to stretch out with a more suburban feel than some of the other urban markets that have seen rent drops,” says Popov. “I think this diversity is keeping some of the demand in the market as people look for affordable options and more space to hunker down at home.”

Since the pandemic is the driver of downward pressure on rents in these markets, Los Angeles will likely continue to see rent decreases as long as the pandemic and risk of COVID-19 infection continues. “I think L.A.’s rental market dip will last as long as the coronavirus concern lasts, and then bounce back,” says Popov. “Some of the key L.A. industries, including entertainment, financial services, marketing, and even tech are likely to restart onsite hiring once it is safe. Moreover, once restaurants and event venues fully reopen the demand for L.A.’s rental market will spike again. Until then, though, cities are having a relatively hard time attracting the same demand as before.”

While coastal markets have been impacted by the pandemic, adjacent smaller markets have actually seen an increase in rental rates. For Los Angeles, this means the Inland Empire and Bakersfield. “Many renters in search of space and affordability are looking inland for housing options,” says Popov.