Rents are going to keep rising, say the people who own the buildings.
Nearly 78% of Southern California apartment building owners say they plan to hike rents in the next 12 months, according to a new survey from real estate brokerage firm Marcus & Millichap. About 22% plan to increase rents by at least 3%.
The increases would come on top of steady gains in average apartment rents here over the last few years, and suggest that a sharp uptick in apartment construction lately will do little to slow rent growth.
“Nobody’s really that concerned about new construction” damping rents, said John Sebree, national director of the multifamily housing group at Marcus & Millichap.
He said an improving economy and job market, coupled with faster-than-average population growth among people in the prime renting age of 20 to 34, would drive demand for more apartments in Southern California in the next few years. With multi-family construction here back at pre-recession levels, there are enough new apartments being built but – from a developer’s perspective – not too many.
“L.A. is a very stable market. It’s a growing market,” he said. “Right now the numbers justify the amount of units that are being delivered to the marketplace.”
Landlords look to be most aggressive in Orange County, where 94% of apartment owners plan to increase rents this year, according to the Marcus & Millichap survey. 87% plan rent hikes in the Inland Empire, and 70% in Los Angeles County. Across the region, only 1.4% expect rents to decline, and all of those are in L.A.
The survey comes on the heels of a report out Thursday from real estate website Trulia showing that average rents in metro Los Angeles climbed 5.7% from May 2013 to May 2014.