Lots of apartments get built in Los Angeles, but the supply doesn't match the demand. In a report released just after the council vote, the Lusk Center for Real Estate at USC found that apartment vacancy rates are under 3% in most of Los Angeles County. Making matters worse, the soft housing market has increased demand for apartments, according to the report. Lending standards have tightened because of the subprime mortgage crisis, so many people who previously could have afforded homes can't get credit and must seek rental apartments instead. The USC report predicts a 4% apartment vacancy rate in Southern California this year, with the vacancy rate in the San Fernando Valley at 2.3%. This is troubling because the Valley has long had a reservoir of affordable apartments. Naturally, the shrunken supply has ballooned rental costs. In the last two years, rent for a typical Valley apartment has jumped nearly 15%, to nearly $1,400 a month, according to the Lusk report.
April 8, 2007