Modest Momentum Seen in 2023 Appears To Have Stalled
By Ryan Patap
CoStar Analytics
September 13, 2023 | 1:55 P.M.
Average asking rents in greater Los Angeles have started declining in late 2023. After seeing modest advances this year, average asking rents peaked in late August at $2.87 per square foot per month. The past several weeks have seen rents start to fall.
Rent movements in greater Los Angeles this year are similar to trends seen nationally, where rents also rose through much of this year before peaking in the middle of this summer.
It is evident that modest renter demand, driven by economic uncertainty and inflation concerns, has affected landlords' ability to advance rents much further. Vacancy is up from a two-decade low of 3.8% in the first quarter of 2022 to 4.8%. With net absorption of 3,400 units during the past 12 months, activity has been well below historical trends, as annual absorption during the past decade averaged 8,000 units. Additionally, positive but weak renter demand was insufficient to offset the delivery of 12,000 net new units during this time.
Areas of the market that have seen less additional supply or provide more affordable units, including many pockets of the San Fernando and San Gabriel Valleys, have generally seen greater rent growth in recent quarters. By contrast, areas with some of the most expensive units, including many areas of Westside Los Angeles, Santa Monica and downtown Los Angeles, have faced more downward rent pressures in 2023.
Additionally, the percentage of properties offering concessions in Los Angeles County is up from a recent low of 11% in August 2022 to 24% in August 2023, demonstrating that landlords and property managers are somewhat more concerned about attracting and retaining renters.
The baseline outlook for the Los Angeles apartment market calls for rents to see little movement through the remainder of the year. By the end of this year, rents are expected to only be up by 0.5 to 1% from the end of 2022.
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