LOS ANGELES (CBS) — Rent is expected to rise for apartments across Southern California over the next two years, with average rents to increase 7.9 percent in Los Angeles, according to a USC report.
The annual forecast showed a consistent increase in rent and vacancy rates across Los Angeles, Orange, and San Diego counties and the Inland Empire in 2011, according to the university’s Lusk Center for Real Estate. The authors say it is partly because of a drop in new construction.
“This is boosting asking rents, reducing or eliminating concessions and filling units. However, the rate of increase will begin to level off a bit by 2013,” said Tracey Seslen, a USC professor and the lead author of the study.
Seslen said rent growth in 39 of the region’s 40 sub-markets is a sharp contrast from two years ago when only three saw increased rents, as well as last year when 26 markets showed flat or growing rents.
Los Angeles County, which had a 6.2 percent increase in average rents and 22,340 net move-ins, was the strongest performer.
“All four metro markets have returned to vacancy rates that are very close to their natural levels, which is the level at which inflation-adjusted rents remain constant,” Seslen said.
In Los Angeles County, the Lusk Center predicted average rents will increase 7.9 percent to $2 per square foot in 2012, with total growth of 9.6 percent to $2.04 per square foot by the end of 2013.
Vacancies are expected to rise slightly in 2012 with increases continuing in 2013 as rent growth slows. Renters have been moving out of “shadow market” inventory and back into traditional multifamily properties, according to the study. That trend is expected to continue through 2012.
Some of the most credit-worthy renters could be lost if home prices continue to fall, because they may buy homes, the study’s authors noted.