Rents Are Rising in L.A.’s Blue-Collar Neighborhoods
In a sign that the region’s economic recovery has finally reached long-depressed working-class neighborhoods in central Los Angeles County, rents in the mid-cities climbed sharply this year, outpacing the rent increases for most of Southern California.
While the gains herald good news--more jobs, better pay and an increasingly confident work force--they also hint at a looming apartment shortage that is further expected to drive up rents and eventually reduce housing choices for the region’s poorest.
Tenants throughout the Southland are likely to feel the apartment pinch, which has already led to acute shortages and escalating rents on the Westside of Los Angeles and in much of Orange and San Diego counties.
But traditionally blue-collar neighborhoods in such cities as Bellflower, Norwalk and Downey may be hit hardest, because there is virtually no new apartment construction going on in those areas.
“The rental market really has tightened up,” said Jim Rodriguez, vice president of the Apartment Owners Assn. of Southern California. “Vacancies have been dropping and rents have been creeping up all over Los Angeles County, other than in isolated pockets. And in places like West L.A., there aren’t any pockets.”
Rents increased and vacancies dropped this year throughout most of Southern California, according to a survey covering the first three quarters of 1998 and conducted for The Times by Palo Alto-based brokerage firm Marcus & Millichap.
There were wide fluctuations in the range, however--from about 10.5% in pricey coastal San Diego and the northern South Bay cities of Inglewood, Hawthorne, Gardena and Lawndale, to a negligible 0.6% in the west San Fernando Valley. A few communities, including Van Nuys and North Hollywood, saw no significant change.
In the central-county cities of Maywood, Commerce, Bell, Downey, Bellflower, Huntington Park, South Gate and Vernon, rents jumped an average of 9%, while vacancies dropped by half. The development was notable because those markets had lagged behind in the region’s economic recovery, with scores of apartment buildings falling into foreclosure as recently as 1996.
“Two years ago, landlords were struggling to get good tenants. Now they have an abundance of them,” said Marcus & Millichap real estate agent John Susank, who specializes in the mid-cities area. “I’m seeing people with waiting lists, and they’re starting to bump rents, in Bellflower especially. I’ve seen rents [on two-bedrooms] go from the $575-to-$600 range to $625-to-$650, just in the last year to 18 months.”
Landlords also are being choosier about tenants these days, rejecting those with histories of bad credit or evictions and requiring higher incomes, several agents said. “You’re not seeing concessions or negotiations anymore,” said Marcus & Millichap agent Mike Marcu.
More jobs and better pay appear to be the major forces behind the rent hikes. Manufacturing employment in the area is growing fast and wages are rising modestly, said Jack Kyser, chief economist at the Los Angeles County Economic Development Corp.
“That area of the county is an economic hot spot,” Kyser said. “That’s a very strategic location in terms of [transportation] access, and there’s a lot of skilled labor.”
The area also is drawing tenants who are moving up from South-Central and other inner Los Angeles neighborhoods, as well as those who have been pushed out of Orange County by fast-rising rents, said agents and landlords.
While the improved job market is good news for workers, rising rents may wipe out all those gains and more, said Jan Breidenbach, executive director of the Southern California Assn. of Non-Profit Housing.
“The good news is the fact that they’re getting a little more money or a job,” she said. “The problem is they’re not really better off, because rents are rising faster. The job still isn’t giving them disposable income or providing them with health services. It doesn’t necessarily change much for them except that it becomes harder” to find an available apartment.
Rent hikes seen this year are probably just a small taste of things to come, because virtually no apartments are being built for low-income tenants. Most apartment construction is occurring in the luxury category in high-rent districts such as the Westside, where more than 1,000 units were expected to be completed in 1998.
Encouraged by the increasingly tight market, investors have been buying up rundown apartment units in the mid-cities, particularly in Bellflower, rehabilitating them and renting them out at substantially higher rates.
Among them is Jeff Yellen, who, through his firm, J.H. Properties, bought an entire block of Bellflower apartments--618 units in all--in March.
Yellen said he has invested more than $2 million in the units, refurbishing them inside and out, and evicted problem tenants and “bad guys” from 172 units.
In turn, he’s raised rents $100 a month, to $650 for a two-bedroom. He said he can’t keep up with the demand. “We’ve rented 200 units over the last seven months. That’s an average of 29 units a month, a new tenant a day,” he said. “We can’t turn them around fast enough.”
Rents in Bellflower still lag far behind other properties Yellen owns in the north Orange County cities of Tustin and Westminster. But he expects that to change over time.
“I would say by midsummer you’ll see everything really tight,” he said. “We’ve only got a six-month supply [of vacant apartments being refurbished], and there’s no new construction going on. I suspect that by midsummer, you will see [vacancy] rates drop to 5% or below, easily, and rents probably increase 7.5% to 12%. We’re already projecting that.”
And midsummer is only the beginning, Yellen predicted.
“What’s been happening all over the county is finally hitting here,” he said. “This was the sleeper. People didn’t realize it was coming, and now things are going crazy.”
Freelance writer Bob Howard contributed to this report.
