RENTS ARE NOT DECLINING.
BUT IT APPEARS RENTS ARE DECLINING.
I am no pinochio. And I can explain. What we are experiencing is rents are stabilizing, meaning rents are not increasing. Because Los Angeles is a rent controlled area, it's recommend that a Landlord give a new tenant the allowable rent increase (usually around 3%) after the first year in order to keep up with market rents. Furthermore, every time a tenant moves out the landlord has been able to increase the rent at least 3% or more. Not this year. Case in point: A client called me last week to re-list her 2 bedroom 1 bath apartment. Her former tenant was paying $1925, had lived there for 2 years and had 1 rent increase after the 1st year. The landlord said to me "we should be able to get "$1975 or $2,000 now".
Now all you renters out there, let's not get all ballistic. After all, in a rent controlled environment a landlord has to keep up with market rent and this is a normal reaction from a normal landlord. On a side note, I once met a landlord who never increased rent in 20 years. His water/dwp bill for the property was more than 50% of his rental revenue. This was not a normal landlord. But that is not what this post is about (fun topic, I know, but let's move on).
This landlord will be able to rent her two bedroom for $1950 in this market. But she will not be able to rent it for $2000. She will try, and after 3-4 weeks she will reduce the rent to $1975. The apartment will rent a couple weeks after that for $1950. This one case exemplifies what is happening in this market. The appearance rents are declining and the appearance it is taking longer to rent an apartment coupled with the fact that there are more renters and more rentals on the market (i.e. previous post) and what is created is an illusionary circumstance. Renters, landlords, bloggers, journalists, researchers scouring the market will look and say "HEY! Rents are declining!" Ah hah! The truth is now revealed: rents are NOT declining but they appear to be declining. In reality, rents are stabilizing.
Post Script: Keep in mind that I am a Rental Agent in the Los Angeles area and deal with specific neighborhoods. This commentary is based 100% on we (TheRentalGirl.com agents) are experiencing, not some statistic we read in the paper. Also keep in mind that Los Angeles trends do not necessarily reflect what is happening in other counties or states.
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So when will the orgy of greed end in Los Angeles? It's outrageous that landlords can increase their rents during this recession, and continue stealing money out of the pockets of their tenants (believe me, I'll be letting the Rent Control people have it over this). As a renter I am incensed that rents have become so expensive here, and judging by the prices listed on your website, it seems you're basking in the glory of all that greed.
ReplyDeleteIt's time for a change. Every rent increase, and every overpriced unit in LA steals from the local economy as people have to spend more money just to keep a roof over their heads. That means there's less money available to support local businesses.
Please do your part to bring affordability back to LA or this city will die under the cancer of all this greed.