SoCal Apartment Rents Jump 10 Percent in a Year
Price per unit and average rents soar throughout the region despite more multifamily construction
The premium on life in La La Land is growing by leaps and bounds.
The average apartment rent is rising at more than twice the rate of inflation in the region, bringing in robust investment and increased sales prices. A new report from NAI Capital shows the average monthly rent in Southern California reached a new high in the first quarter of about $2,150 a month, which is 10.4 percent higher than it was one year ago, and 12.9 percent above the rate when the world shut down for the pandemic in March 2020.
Low interest rates and access to capital also fueled increased investment in multifamily housing. The median sales price per unit in Southern California rose 11.2 percent from last year to $300,000 per unit. This comes after the state lifted its eviction moratorium and the economy started to recover.
Completed construction added to the market over the past year didn’t move the needle much as the number of vacant units still dropped 32.2 percent. Year over year, the overall vacancy rate ticked up as completed construction was added to the market — albeit negligibly, 10 basis points, landing at 3.1 percent.
New construction in multifamily housing units increased 8.5 percent in Southern California.
In Los Angeles County, the number of vacant multifamily units declined 37.6 percent compared to the first quarter of 2021 — steepest drop in the region. Rent increased 7.5 percent from 2021 to an average of $2,084 per month. The median sales price per unit hit $365,523 per unit, up 10.1 percent year over year.
The Inland Empire, which posted healthy population growth and employment gains, had the largest rate of increase in multifamily construction, up 58.8 percent from a year ago. Due to a steady stream of new construction added to the market over the past several quarters, the number of vacant multifamily units in the Inland Empire grew 28.1 percent from last year.
Inland Empire rent also surged 13.3 percent to an average of $1,928 per month and the median sales price grew 31.2 percent year over year – the sharpest in the region —to $196,783 per unit.
The number of vacant multifamily units in Orange County dropped 31.9 percent annually in the first quarter, while asking rent soared 16.8 percent to $2,463 per unit. The median sales price hit $340,625 per unit, up 12.4 percent year over year.
Gregory Cornfield can be reached at email@example.com.