SoCAL: Rent is Going Up!

Should I rent or buy? This is a question so many would-be homeowners have asked themselves in recent years, and all too often they are left with the realization that owning is simply unaffordable at the moment. Fortunately, I have good news for those of us who make a living off buying and selling homes throughout the southland; the decision to buy might become a little easier – or harder if you prefer to rent – in the near future, as a new study from USC has revealed rents will rise over the next two years.
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According to the research performed by USC’s Lusk Center for Real Estate, rents across Southern California are expected to rise significantly by 2016 – the latest reminder of growing affordability difficulties throughout California.

In Los Angeles County, its expected rents will jump by 8.2% by 2016, increasing to an average monthly rent of $1,856. Similarly, rents are expected to increase by 8.6%, 9.9% and 6.9% across Orange County, the Inland Empire and San Diego County respectively.
On average, the SoCal region is expected to see an 8% bump, increasing faster than the 3%-4% rise we’ve seen this year.

What impact will higher rent have on the housing market? While the study from USC suggests that rental vacancy rates will slightly decline, many RE professionals are hopeful this bump will be enough to drive some renters back into the buying market.

Richard Green, director of the Lusk Center, commented on the matter saying, “Though the economy and employment have improved, renters’ incomes are stagnant. So while net absorption and occupancy rates are moving in the right direction, affordability continues to worsen.”

Do you think rising rental costs will drive more buyers into the market? What are your thoughts?

  • ms100

    Purchasing a home in SoCal, especially Orange County and San Diego, is not affordable for the average person. Rising rents will force people to find other ways to accommodate, such as families, couples or individuals sharing rentals. The majority of people rent because they cannot afford to buy. If the current guidelines for obtaining a mortgage are changed in order to make home ownership more attractive than renting, then I am afraid we will be back in the same mess we were during the recent foreclosure crisis.

  • And….rent controls will make the problems worse! Rents will increase even more because rent controls actually create a scarcity of vacant units. Tenants who already have below-market units do not move, which reduces supply, increases demand and increases prices. Rent controls are backfiring and are hurting RENTERS (more than owners) in times like these. This is what happens when markets cannot react on their own, but have to adhere to the artificial limits imposed by politicians (and ultimately voters).