How New Apartments and Condos Affect Rents in Los Angeles
by Ben Nicolas
on Wednesday, January 25th, 2017 at 8:49am.
Los Angeles is a very big, mixed up, beautiful mess of a city. Itís got bits that are clean and pretty, others that have more grit with hidden drinking and dining gems hiding behind nondescript storefronts and in back alleys. There are two things nearly all of LA has in common: low vacancy and high rents.
Rental site, Zumper, shows most of West LA from Playa Del Rey to Brentwood sitting at average 1-bedroom rents of over $1,800, with a number of hotspots over $2,400, and with Santa Monica alone able to claim an average of over $3,000 as if trying to compete with San Francisco prices.
While most Angelenos feel the increases on their finances, eyes turn to the battalion of construction cranes that dot the skyline. Before long, those cranes get replaced by new luxury apartments and condos that fill with folks both local and from abroad with incomes generally over $150,000.
The result is that many people who are struggling with their rising rents will point their fingers at the rampant development and blame new luxury apartments and condos, and their developers, for the increase in rents.
While placing a new luxury building in a lower rent neighborhood can be divisive, and while knocking down some well-loved old architecture to make room for something modern and minimalist creates a new topic altogether, these things are not to blame for rising rents. Hereís a few reasons why.
New becomes old
One popular argument is that new luxury development is taking away from lower income housing and not giving anything back. In the short term, yes, but all things get old. Whatís new and shiny new will become dated and devalue.
Consider a lower rent apartment around the East Hollywood or Los Feliz area that was built in the 1920s, and where the manager shares legends about the old-school film celebrities that used to live there. A building like that was once a luxury apartment too, and now itís joined the pool of rent-controlled units with timeless looks that many renters seek out.
In time, all new construction becomes old and enters into the more affordable housing segments as new construction beats it out in terms of relevant design and features.
When old stays new
One of my favorite examples of what happens when new development isnít flourishing is San Francisco. It is one of the most beautiful cities in the country with its charming architecture and breathtaking geography. It is the most expensive city in the country as well. The thing is that this wasnít always the case.
The city was famous for its collection of artists, musicians, poets, and various bohemians that could afford to be there while working their crafts. Within the last decade, give or take a few years, that has changed dramatically.
In the case of SF, new construction cannot be blamed for this. While its beauty has attracted people from allover the country, and even the world, the city has some of the most stringent regulations for new construction around. Yes, the buildings are all old and unique, but those same buildings are as expensive as a new luxury loft in downtown LA or Santa Monica.
On the other hand, Seattle has seen enormous development since the 90's, and a large percentage of it's buildings are barely 20 years old. It is a thriving city with flourishing industry and desirable geography as well. Yet, it's average rent for a 1-bedroom is only the 10th highest in the nation, comparable to San Diego and Honolulu.
The argument can be made that new construction helped Seattle keep price increases under control, and the lack of new construction in San Francisco played a part in pricing for existing housing to skyrocket as the population went up and available housing went down.
The more the less merry
The bottom line that most can agree on is that more people will always mean higher rents. It makes housing a hotter commodity, and according to basic supply and demand, prices will rise accordingly. Los Angeles has always been an attractive hot spot for people who want a dry climate and who want a shot in the film and music industries. Most families will continue to have more than one child, and with the help of the internet, planning a move to a new city has never been easier.
There's every reason the think that LA's population will continue to grow. Rather than resist new construction that will help give some of this growth a place to live, we can start to appreciate that it might actually be helping our rents not rise any faster than they already are.