Los Angeles, Orange County guide to finding an apartment
It is known that searching for an apartment in Southern California is very difficult. In the past two years, the search has turned into a particularly nightmare.
Partly for reasons related to the pandemic, the number of units available for rent has fallen to historic lows. The rent rose.
Some apartments even experienced bidding wars – an unwelcome reality usually reserved for the seller’s market.
But now, a little sanity has returned.
If you’re looking for a new rental, don’t expect a bargain, but you may find the search less crazy.
What is happening exactly?
Simply put, there are more apartments for people to move into. Across the region, vacancy rates are rising after falling to their lowest levels in decades in 2022 and 2021.
In Los Angeles County Early last year, only 3.7% of apartments were vacant and available, the lowest level since 2001, according to real estate data firm CoStar. Now that measure is 4.4%.
It was worse in both the Inland Empire and Orange County, where the vacancy level fell to about 2% in 2021. In Riverside and San Bernardino counties, that was a record high in a data set going back to 1982; In Orange County it essentially equaled the record set in 1984.
The vacancy rate has now doubled in both regions, to 5.4% in the Inland Empire and 4.1% in Orange County.
In Ventura and San Diego counties, the vacancy rate similarly fell below 3% in 2021 and is now 3.8% in San Diego and 5.4% in Ventura.
Rob Warnock, a researcher at apartment rental site Apartment List, said the number of vacancies was very low because many people moved out of shared living situations with family or roommates in 2021 and 2022. They wanted a place of their own and essentially created a wave of new families that gobbled up the available rentals.
Warnock said a rebounding economy, stimulus payments and a desire not to cooperate with others as happened early in the pandemic may have helped drive the increase.
Now, the switch has been flipped.
With consumers concerned about inflation and the direction of the overall economy, they are forming fewer households as new apartments continue to open.
“Unemployment still looks good, but there is uncertainty,” said Ryan Battab, an analyst at Costar. “That makes people more careful with spending, committing to a new lease, moving out of their parents’ house — all those dynamics.”
Another factor may be at play, said Richard Green, director of the USC Lusk Center for Real Estate.
“The puzzle has been that people are leaving California — how come vacancies aren’t up?” He said. “Maybe it’s starting to show.”
What does that mean for me?
To be clear, vacancies are still much lower here than in many markets across the country, which economists attribute to the difficulty of building housing in California. But if you’re looking for a spot, you may have an easier time than this time last year.
Michael Lucarelli is CEO of RentSpree, a Sherman Oaks-based company that provides application and rental collection services to approximately 41,000 rental agents, property management companies, and individual landlords in California.
As the number of vacancies rises, he said tenants are less likely to have to make quick decisions about whether a place is right for them, and he hears less and less about bidding wars for his client’s properties.
“It creates more leverage on the tenant side,” Lucarelli.
What about rent?
By most measures, rent is still rising, however Not as fast as it used to be.
Not only have high vacancy levels made it difficult for landlords to charge more, but after years of steep increases, some tenants are being taken advantage of.
According to data from real estate firm RealPage, the average asking rent for a vacant apartment in Los Angeles County during the first quarter of 2022 rose 17% from the same period a year earlier.
But by the first three months of this year, rental growth had slowed, with prices 6% higher than 2022 levels.
A similar slowdown was seen in the Inland Empire, as well as in Orange, Ventura and San Diego counties.
Data from Apartment List and CoStar point to a more favorable environment for renters.
According to CoStar, median rent remains positive in all Southern California counties, but is rising less than RealPage data shows.
According to Apartment List, the median rent per vacant unit turned slightly negative in the Inland Empire, Orange County and Ventura County, falling less than 2% in April from a year earlier.
In Los Angeles County, the median rent rose just 0.21%.
Warnock says he expects rent across Los Angeles County to also go negative in the coming months, but he doesn’t expect rent there and elsewhere in Southern California to see a sustained or appreciable decline, since so few rentals are being built.
“A 1% annual rent drop is not going to bring a lot of relief to someone looking out there,” he said, especially when apartment listing data shows rent in Los Angeles County is 11% higher than it was at the start of the pandemic and 33% higher. In the Inland Empire.
What if I cannot afford the rental housing?
This is not uncommon in expensive Southern California.
One option you have is Section 8, which is a federal program administered by local authorities. If you meet the income qualifications and receive one of the coveted vouchers, you can find housing with a private landlord on the open market and you will pay approximately one-third of your income for rent and the government will pay the rest.
However, there are not enough vouchers for everyone who can qualify.
You can check with your local government to see if they are accepting applications, but they may not be. The city of Los Angeles opened its waiting list last fall for the first time in five years, but it is now closed.
Another option you have is to apply for apartments designated for low-income people. This can be government-owned public housing or housing built by non-profit organizations.
Sometimes, for-profit developers include a few low-income units in their new projects as a condition of project approval.
You can find more information on how to apply for these apartments and various subsidies in the following guides from times.
If I don’t want to move, will the rent go up?
Landlords say the costs of running and maintaining buildings have risen alongside overall inflation, meaning that unless they cut these expenses, they will need to increase rent if they want to continue earning the same amount.
At the same time, high vacancies can pose a threat to a landlord’s bottom line, and many landlords will likely be “more willing to do whatever it takes to keep you there,” Warnock said.
However, some landlords have different financial motivations.
For example, a common investment strategy in real estate is to buy buildings whose rent is well below the norm, and then quickly increase the rents to what is considered market.
According to RealPage, whose data covers mostly large complexes, the average renewal increase for Los Angeles County renters was 5.5% in the first quarter of 2023, down from about 8% in the second quarter of 2022.
Is there any law that limits how high the rent I can increase?
In most cases, yes.
In California, income-restricted unit owners can charge whatever they can for vacant units, but they usually face some sort of restrictions on rent increases for existing tenants.
If you live in an apartment building that was built more than 15 years ago, the state’s rent cap law limits annual rent increases to no more than 5%, plus inflation, up to a maximum of 10%. Since inflation is very high, the current maximum has been set at 10%.
Some cities have stricter rules often referred to as rent control or rent stabilization.
In Los Angeles, buildings built on or before October 1, 1978 — and even some new buildings — fall under the city’s rent stabilization ordinance.
In the years before the pandemic, the law capped annual rent increases for existing tenants in those buildings at 3% or 4%.
Currently, city code prohibits any rent increases for current tenants in rent-stabilized buildings. The ban, which was passed in the early days of the pandemic, is scheduled to expire in 2024.
In most cases, if you live in a building built within the last 15 years, there are no legal limits on how much rent can increase in both Los Angeles and statewide.
However, during declared emergencies – as happened during recent storms – anti-price gouging rules come into effect and rents rise by more than 10%.
As of May 1, according to the website of the Governor’s Office of Emergency Services, anti-tampering rules currently only apply to Riverside, San Diego, Contra Costa and Yola counties. It is scheduled to expire on May 20.
More information on how to find out if your building falls within some of these limits can be found here.
Are there any other tips I should know when looking for a new place?
Yes. Although vacancies are increasing, they are still tight and you may need to apply to multiple places before finding a home. With each owner typically charging an application fee, these costs can add up.
If you want to limit fees, check to see if the landlord accepts or will accept applications from companies like Zillow or RentSpree that allow you to apply to multiple properties for a fixed price
For more tips, check out The Times’s comprehensive guide to renting in Southern California.