Zillow chief economist Stan Humphries tells us that conditions still bode well for apartment demand in Southern California, though with a bit of a headwind: the local economy is creating jobs, rents are up (2.9% year-over-year in Orange and LA counties combined, according to Stan), and so are occupancies. For-sale housing is also bouncing back, but despite that demand will continue to fall heavily on the rental side, because a lot of people still have impaired credit, and the Gen Ys are still less than sanguine about buying a place to live, Stan says. People are also still moving out of the doubled-up arrangements with roommates and family members that the recession forced on them. They usually rent their own place before buying.
One thing currently working against rental demand is that for-sale housing is still more affordable in SoCal than it has been historically. But that isnt a strong enough headwind to derail apartment demand, Stan says, even thats going to change in a year or two as home prices go up and interest rates rise. The markets still going to need a lot of rental units going forward, he says, including market-rate and affordable. Just last week, for instance, affordable housing specialist Jamboree Housing Corp broke ground on the 74-unit second phase of Doria Apartment Homes in Irvine. It's the companys second workforce housing development in partnership with the Irvine Community Land Trust.
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