REAL ESTATE: USC forecast anticipates rising rents in market through 2021
By Hannah Madans
Rents in Southern California are expected to increase as approved multifamily units remain below levels in other cities, according to the 2019 USC Casden Economics Forecast.
The forecast expects rents to increase an average of $139 in L.A. County by 2021.
Fewer new units are approved in the region than in other cities in the Western United States, according to the study. In Southern California, three units are approved for every 1,000 people added while five units are approved for every 1,000 people added in Phoenix and Las Vegas.
“The number one reason is zoning,” said Richard Green, director of the USC Lusk Center for Real Estate. “We have the wrong zoning for Los Angeles. The zoning code goes back to just after World War II.
Housing, he added, is incredibly expensive to build right now, increasing the problem.
Phoenix and Las Vegas were top destinations for workers leaving California. In 2018, the region lost 20,000 people, according to the forecast.
In addition to a lack of affordable housing in the area, Green said not enough housing was being built for people making $40,000 to $50,000 a year. That’s partly why people are moving to other areas, he added.
Salaries are expected to increase somewhat faster than rents in 2019 but not enough to make a substantial difference. “Affordability has improved in the region slightly in the last couple of years,” Green said, “but it’s at such a bad level that it’s nothing to celebrate.”
Green expects rents to increase slightly as people leave the state in the next few years. He also anticipates that vacancy rates will fall.
Tech companies have recently made pushes to help with the housing affordability crisis.
On Oct. 22, Facebook Inc. committed $1 billion to help with affordable housing in Silicon Valley, a move the company predicts will create 20,000 new housing units.
In June, Google committed $1 billion to housing in the Bay Area. And in September, short-term rental platform Airbnb Inc. launched a $25 million investing program with RBC Global Asset Management Inc. to support affordable housing in L.A. and the Bay Area.
The original article can be found here.