Bad news for renters in Southern California: rent is expected to increased across the Southland in 2012.
Why? Because the demand for apartments has increased as young workers gain new employment. And at the same time, the supply of apartments has decreased as units are filled and construction is slow, says a report released Wednesday by USC's Lusk Center for Real Estate.
The hardest hit will be Los Angeles County, where rent is expected to increase nearly 10% over the next two years.
If higher rent doesn't sound like news to you, it's because rents already increased last year. Rental prices in 2011 rose in 39 of the 40 sub-markets in Los Angeles, Orange, San Diego, Riverside and San Bernardino counties, according to the study. That's in stark contrast to 2009, when rents rose in only three markets and 2010, when only 26 markets saw increasing rents.
While the rising prices hurt renters' wallets, it's good news for investors. And for renters who are contemplating the jump to home ownership, home prices are at their most affordable level, the report said.
The report also noted that rent price increases could be slowed if job growth does not pick up. While economists predicted 35,000 to 40,000 jobs would be created this year, the county’s unemployment rate remained at 11.8 percent in February.
A separate report by mortgage market tracker CoreLogic of Santa Ana released Wednesday showcased investors' increased interest in the lucrative business of converting foreclosures to rental properties, the Los Angeles Times reports. However, the report also found that foreclosure activity is at its lowest since 2007.
Click through the slides below for the predicted amount that rent will increase in Los Angeles, Orange County, San Diego and the Inland Empire. The slideshow also includes average rent in 2011 for each region.
In 2012, rent is expected to increase 3%, with total growth of 3.8% by the end of 2013. In 2011, average rent was up 3.4% to $1,069 a month. (Photo credit: Alamy)
In 2012, rent is expected to increase 3.4%, with total growth of 5.2% by the end of 2013. In 2011, rent was up 4.3% to $1,377 a month. (Photo credit: Alamy)
In 2012, rent is expected to increase 3.3%, with total growth of 5.1% by the end of 2013. In 2011, average rent was up 3.2% to $1,523 a month. (Photo credit: Alamy)
In 2012, rent is expected to increase 7.9%, with total growth of 9.6% by the end of 2013. In 2011, average rent was up 6.2% to $1,596 a month. (Photo credit: Alamy)