Having been a tenant myself for many years, I know what it feels like to dread that yearly letter from the landlord telling you how much they’re going to raise your rent. And being a native of Los Angeles, I know just how much more living in a major metropolis can hurt the wallet every year. But 10 percent seems a little outrageous…even for the City of Angels.
Well, according to RadPad, a Los Angeles-based rental iPhone app, that’s how much local rents have increased in the past year for the average one-bedroom apartment as of August 2013 — a fourfold increase from the normal 2 to 3 percent yearly rent raise in the city, reported the local NBC affiliate.
Why so high? Any economics professor would tell you it’s a classic case of supply and demand.
As RealtyTrac has reported over the last five years, Los Angeles (and other parts of California for that matter) were hard hit by the foreclosure crisis, along with Arizona, Nevada and Florida. A lot of people who lost their homes to foreclosure need a place to live. For the fortunate one, they moved in with relatives and friends.
For the less fortunate, they were stuck looking for a place to rent. A situation made even more difficult by the fact that the recession hit the construction industry equally hard, so builders were not putting up anywhere near the number of multi-family buildings it would take to house all those people forced from their homes by foreclosure.
A good scenario if you were a real estate investor over the past five years, however, buying up single family homes as rental properties anywhere in Los Angeles County or the neighboring Inland Empire.
Done in partnership with RentMetrics.com, based on their analysis of 23,000 rents around the Los Angeles area, the RadPad study concluded that Brentwood has the most expensive rental market in the city ($2,540 per month), followed by Westwood ($2,485 per month), Marina del Rey ($2,445 per month), Santa Monica ($2,430 per month) and Pacific Palisades ($2,150 per month).
North Hollywood headed the list of the least expensive areas to rent in the city at $1,040 per month for a one bedroom apartment. Korea Town came in second ($1,235 per month), followed by Pasadena ($1,260 per month) and Glendale ($1,350 per month).
Los Angeles is not alone in its angst by any stretch of the imagination. Recent reports show similar rent crises in other parts of the country due to a tight housing market. Places like Fort Collins, Colo., and Seattle, Wash., where research firm Reis found rents rising faster over the past year than in any other of the 81 metro areas it tracks. Rents rose 6 percent in Seattle over the 12 month period ending with the second quarter of 2013.