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Are Rental Prices in LA Dropping?

Are rents in LA County going down? What does it mean if you are a landlord? Watch this video to learn more!

Rental prices going down
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Are rents going down in Los Angeles? What does that mean if you are a landlord? Today, Los Angeles realtor Scott Himelstein is going to discuss it.

Scott Himelstein with the Scott Himelstein group. So today we’re talking about if rents are actually going down in Los Angeles County and what does that mean for landlords. So during the pandemic, the rents in Los Angeles County just skyrocketed, in 2022 they went up 17% in the first six (6) months of the year.

So  fast forward to 2023 and the rent slowed to a pace of just 6% in the first three months of 2023. And we’re seeing in the surrounding counties of Ventura Orange and Riverside and San Bernardino you’re actually starting to see negative growth when it comes to rent increases. And just last month in May of 2023 in LA County you only saw a 0.021% increase in actual rent in Los Angeles County.

What does this all mean?

Well, it kind of makes sense if you really think about it that you’re seeing the rent now become a lot more stagnant. And actually in a lot of places you’re seeing starting to decrease a little bit with the rapid growth in rent over the course of the last few years. A lot of people are just simply not able to afford it. You throw an inflation in there and they’re just absolutely tapped out. What you find happening is that a lot of tenants they’re either moving out of the area completely or they have to be able to stick to what their actual rent is that they feel comfortable with.

So on the one hand, it’s very conceivable that you might see rents go down two to 3% but two to 3% decrease in the monthly rent is not going to make a big difference overall in the marketplace.

So what are we seeing right now ourselves? So on all of our lease listings where we represent the landlords we are seeing a lot of pushback on the prices. We recently rented one out for $5,000 a month and that’s what the comparables suggested that it needed to rent for. Over the course of the first two weeks we only had two showings and really we didn’t think any of them were very viable. Well, the third showing that came in was a group of friends that wanted to become roommates. And this is what you’re seeing take place right now and it’s happening quite often across LA County.

They call it roommate hacking. By themselves they, want a bigger space and by themselves they’re not able to afford it individually. Maybe they can only do 1500 to $2,000 a month which is a smaller apartment because right now the average cost of a one bedroom apartment in LA County is $2,433 a month. So knowing that to get a bigger space and to have more privacy, sometimes you’re seeing four to six friends pool their money together and then as a result that’s how they’re able to get into a bigger place. We’re seeing that now in our lease listings.

A majority of the people that are looking to rent are those that they don’t want to be in an apartment complex. They’re working professionals but they want something bigger. So you as a landlord have to be aware of that. And in this situation, we had the parents cosign. They submitted all of their financials and everything checked out okay.

So we are seeing decreases right now in the monthly rent in Los Angeles County. This is something that you need to be aware of as a landlord when you’re pricing your home to rent out right now.

Now, I recently just had a meeting with an investor and he owns over 1300 doors. He owns commercial, residential, multi-residential properties. He was telling me all over Southern California right now that the renters are just simply not able to be able to afford the increases. They’re pushing back and starting to ask for concessions again. And you’re starting to see the vacancy rate creep up a little bit as well, just because you’re having more people that are moving out of the area into more affordable places.

So these are all things that you need to be aware of if you’re trying to rent out your home. If you have any questions about what you need to do to rent your home, send me a DM, send me a message. You can always call me, (818) 396-3311. That’s (818) 396-3311. And thanks for watching.

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