Southern California residents should expect their rent bill to go up substantially in the next couple of years.
A new report from USC’s Lusk Center for Real Estate forecasts that renters in Los Angeles will pay an average rent of $2,369 in 2021, a $139 increase from the current average rent of $2,230.
)
In Orange County, renters will see a $109 increase to $2,199 average rent; and the Inland Empire rents will jump $100 from $1,500 to $1,600 a month in 2021, according to the report.
"Rents are continuing to rise, and at a slower pace. And rents in the past year rose a little bit less than renter incomes," USC Lusk Center for Real Estate Director Richard Green said in a news release. "Still, an ongoing lack of affordability is causing skilled workers to flee the region and seek employment and housing elsewhere."
The multifamily vacancy rates in the SoCal region are expected to remain stagnant, at about 3.5%, Green told Bisnow.
Green said the lack of affordability is pushing thousands of people to leave the state to places such as Phoenix and Las Vegas. While the state and SoCal region are gaining skilled college-educated imports, most of the people that have left the region do not have a college degree, Green said.
Since 2010, Los Angeles County has lost 550,000 people to domestic migration. In the last year, 90,000 people left Los Angeles, Green said.
In Orange County, more than 600,000 people left to other places in the U.S. since 2010.
"We have reached the point where people are moving out and we're seeing big outflows into Las Vegas and Phoenix," Green said. "It’s no coincidence that nearby cities with thriving economies and more robust pipelines of new units coming to market are draining skilled workers that would otherwise be part of the California economy."
Green said former California residents are going to places where housing is more affordable, and developers are also building in those areas since they face fewer regulatory and legal barriers. In Los Angeles, Green said, it takes a developer three years to get a building permit.
"Los Angeles and places in California just needs to speed [developments] up," he said.
The outflow of skilled workers and lack of construction development will ultimately hurt the local and state economy in the long run, Green said.
"I think the big question we have to ask is, 'Can you sustain an economy without those who do the unpleasant work that people who have college degrees don’t want to do?'" Green said. "Ultimately, the biggest impact is that the economy won’t grow as much as it should."
)
)
)
)
)
)
)
)
)
)
)
)