As the coronavirus pandemic increases vacancies in Los Angeles, rental prices are falling making this the best time to shop for a new apartment.
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Typically, rental prices in Los Angeles, California, do nothing but rise. Increasing prices just make sense. The city is popular, and there isn’t a lot of real estate available unless you can afford the high premium of owning your own land. This makes apartments highly sought after as a more affordable option than buying. Even if renting is more affordable than owning your own home in LA, supply and demand keep prices from dropping.
It took a pandemic to finally get apartment prices in LA to fall. Real estate data shows that the average rent fell by 3.3% in May compared to the same month last year. This means that it’s the first time the city has seen a significant drop in apartment prices since the Great Recession started in December 2007, and maybe right now, it is a good time to starting thinking about moving to LA.
Putting This Price Drop Into Perspective
As a consequence of the 2020 economic crisis that has been brought on by the coronavirus outbreak that causes COVID-19, fewer people are looking for apartments in LA. To counteract this, landlords have been reducing prices across the board to attract and maintain occupancies.
The drop in rent varies greatly depending on exactly where you look for an apartment. For example, the average price in Pasadena, which is just northeast of downtown LA, saw apartment prices fall by 2.54% between March 11 and March 30 of this year. Downtown LA prices, however, fell by an average of 0.71%. In either case, apartment rent declined throughout the entire city.
Take the Eighth and Grand, for example. This luxury apartment complex offers high-end amenities in the downtown area. Before the economic downturn caused by the pandemic, renting a 566-square-foot apartment would have cost around $2,286. Now, the price for a residence of the same size has fallen to $1,771 making it more affordable.
Of course, the Eighth and Grand isn’t the only luxury apartment complex to cut its prices. Just one block away, another luxury building started cutting its monthly rent as well. This specific building reduced the price of its 1,284-square-foot apartments by $385 to just $3,870.
The Biggest Cuts Are at Top-End Apartments
While rent cutbacks have been made at numerous apartment buildings, luxury rentals have seen the steepest price reductions. Most likely, the cuts come as people struggle to pay high prices during these tough economic times.
As a result, people who used to rent high-end apartments have been downgrading in a bid to save money. Since this is the case, the medium- to low-end apartments haven’t had to make as many cutbacks. They’re finding new clients among those who used to be top-end apartment residents.
Economists say that this trend is actually pretty common during an economic downturn. High-end apartments tend to fall further in price than lower-end apartments. The reason is that high-end rentals are considered luxuries that people can cut in order to save money.
More Cuts Are Probably Coming
While top-end apartments have had the most cutbacks so far, economists say that it’s just the start of things to come. As the economic downturn continues, more and more people will look for ways to save money. For many of them, this involves finding cheaper places to live. Subsequently, they’ll move out of large cities, such as Los Angeles, in search of cheaper rent in nearby cities and towns.
When that happens, landlords will start to lower the rent at medium- and low-end properties too. While taking a loss on an apartment isn’t a favorable move, it’s better than allowing the property to remain vacant. Essentially, receiving some rent is better than receiving nothing at all.
Cutting Amenities to Save on Operating Costs
As apartment prices in LA are falling, property owners are dealing with hard times as well. While many landlords find that cutting the cost of rent keeps their apartment buildings full, they have to find other ways to save money on operating costs. Because of that, many of them have eliminated certain amenities.
For example, some luxury apartment landlords have cut dog-walking and similar high-living services. Doing so allows them to save money so that they can offer cheaper rent. Once again, this trend is being seen more in the high-end apartment sector because those apartments are more likely to offer luxury amenities.
Housing Market Still Remains Relatively Unchanged
While landlords are starting to lower the prices at some of their properties, the housing market still remains expensive. The housing shortage in LA makes owning a home expensive even during the economic downturn. Experts say that it will take more than a recession for the favor to tilt toward buyers.
Likewise, landlords and property owners still hold most of the power in terms of renting. While many are cutting prices to stem vacancies, plenty of people are still looking for apartments in LA. Rent might be the lowest that LA has seen in a decade, but it’s still much higher than in nearby areas of California.
Now Is the Time to Apartment Hunt in LA
It took a pandemic to get apartment prices to fall in Los Angeles for the first time in more than 10 years. Who knows when they’ll be this low again. If you’re determined to live in the big city, now is the time to hunt for an apartment. A good guide can make moving to LA an easy and seamless process. Check out your options now before it’s too late.
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