Los Angeles is in a rental crisis, with a short supply and high percentage of renters driving up rents to terrifying new highs (especially as a share of income; median income earners here have to spend 47 percent to afford the median rent). Maybe an apartment-building boom will help! Permits for new apartment construction are back to pre-downturn levels and up 15 percent in the first quarter of 2014 from where they were last year, reports the LA Times. Building permits for apartments and condos issued last year were at their highest numbers since 2006, according to data from the Census Bureau. So that higher supply should in theory work to bring down outrageously high rents, but psych, that’s not actually going to happen.
The new apartments being built are mostly Class A, high-end rentals in the most desirable parts of the city, so while luxury rents might level off, the middle and bottom of the market won’t likely be helped by the building boom. Mom-and-pop landlords and smaller apartment complexes haven’t been impacted “at all” by the boom, and “[r]ents are going up. And up and up,” the president of Westside Rentals says. “It’s a really good time to be in the apartment business,” says the Senior VP of developer Aimco. By contrast, it remains a rough time to be the average renter in LA. And buying is just straight out for the majority of people at this point.
The apartment boom is a national phenomenon. That same Census Bureau report shows that apartments account for around 40 percent of new housing, which is “the highest share in 40 years”, says FiveThirtyEight.
Senior Director, Coldwell Banker New Homes Division
With over 200 condominium, townhome and loft projects successfully marketed
“Fewer properties for sale with such remarkably low interest rates make it a great time to sell but a more difficult time to buy”