Los Angeles’ average rent fell 3% in May from a year earlier as coronavirus infected the economy
The average asking rent for an apartment in Los Angeles County fell last month from a year earlier, according to RealPage, a major real estate data provider.
The 3.3% decrease to an average of $2,254 for units of all sizes followed a 0.8% drop in April and reflects how the coronavirus-related economic downturn is sweeping through the rental housing market.
Some landlords and property managers said they’re giving concessions such as a month of free rent or dropping their asking price to get units filled as concern over the economy grows.
According to RealPage’s data, the last time rents declined was in 2010 in the wake of the Great Recession.
“We’ve had a big dropoff in overall demand,” Greg Willett, the company’s chief economist, said, citing the coronavirus.
Rent data have limitations because, unlike home prices, the price a tenant pays is not public record. Rent data from Zillow, for example, show the pace of increases slowed in April, but rents did not fall from a year earlier, and May dataaren’t yet available.
In addition, RealPage’s numbers cover professionally managed apartments and thus leave out many mom-and-pop landlords who charge lower rent.
The RealPage data showed declines were focused on the middle and high end of the market, with so-called Class B properties seeing declines of 4.5%, while the top end, or Class A, fell 3.5%.
Average rents in Class C apartments, usually older, more run-down properties, were essentially flat, rising 0.1%.
What happens with rent going forward depends on the direction of the economy.
More businesses have started to reopen in recent weeks. That could put more upward pressure on rents, but many economists expect the recovery to be slow, particularly if reopening triggers a second wave of COVID-19 cases.
RealPage predicts rents will drop further in L.A. County, with annual declines hitting 5.6% in the first quarter of 2021.
The shift in the market comes after years of steep increases pushed some tenants out of their neighborhoods, while crimping the budgets of others.
Annual rent increases started to slow even before the coronavirus outbreak, which analysts attributed to the fact that many tenants had reached their limit.
As president of property management firm Eberly Co., Chuck Eberly manages about 2,700 units in the Los Angeles area across the market spectrum, from high-end properties to working-class apartments.
Eberly said he’s had to offer a couple of weeks of free rent and in some cases dropped rent outright, mostly for his more expensive properties. Although he called the rent declines “small adjustments,” he expects he’ll be forced to make more cuts down the road.
“I see a lot of product right now and just not a lot of lookers,” he said.
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