The 2017 University of Southern California Casden Economics Forecast predicts that renters in Los Angeles, Orange, and San Diego counties, as well as those in the Inland Empire, will pay an additional $121 to $149 each month by 2019.
The forecast, released annually by the USC Lusk Center for Real Estate in partnership with Beacon Economics, assesses current and projected multifamily rents and vacancies in the four aforementioned regions and Ventura County.
According to this year's report, average monthly rents are expected to increase by $149 in Orange County, $136 in Los Angeles County, $124 in the Inland Empire, $121 in San Diego County, and $98 in Ventura County over the next two years. The Center cites rising employment and low rates of homeownership as the primary drivers of the increases.
“It’s certainly no surprise to anyone—developers, landlords, tenants, and elected officials—that available units are becoming more scarce and more expensive in Southern California,” said Lusk Center’s Richard Green, co-author of the forecast, in a statement. “As employment and wages improve in the region, homeownership remains stagnant. This combination is a key stressor in the availability and cost of apartments and has an increasing impact on the local economy.”
The 2017 forecast gives special consideration to rent payments made by new tenants as opposed to existing tenants, given the increases in employment, wages, and population that Southern California has seen over the past year.
Christopher Thomberg, forecast co-author and founding partner of Beacon Economics, explained: “The high cost of housing is a huge challenge for employers attempting to recruit out-of-state talent.” According to the report, Southern California renters who moved from another state paid $200 more than current residents, while renters who moved from other areas in California paid $124 more.
The report concludes that income growth isn't keeping up with rent growth in the five Southern California regions assessed, and predicts ongoing negative effects for residents and employers in these regions.
