Today’s MLS data reports that the average Downtown rent has increased from $2,606 ($2,400 median) in the last half of 2013 to $3,021 ($2,725 median) currently. That’s $300 to $400 per month more rent today than just 2 years ago. Unfortunately, that is just the beginning.
Think Downtown Los Angeles rent prices are already high? Wait a few years. While we are dazzled by the amazing transformation of Downtown into the most exciting place on earth, the average Downtown rent will hit $4,000 in the blink of an eye. The Atlantic reports that over the next 10 years, the rental population in the U.S. will climb by about 4 million people. And that growth rate pales in comparison to the blistering speed of Downtown population growth.
Census Bureau data puts DTLA’s 2000 population at 27,849 people, but the 2013 total (according to the Los Angeles Downtown Center Business Improvement District) almost doubled, reaching 52,400, says KPCC.
Of the 57 residential construction projects currently under way in Downtown Los Angeles, only 3 are condominiums for sale. Investors are placing billions into rental communities because their projections show huge profits coming at the expense of renters over the next 10 to 20 years. No developers have converted new condo lofts in Downtown in more than 2 years. And none have plans to convert any more soon.
Those who think it is cool to rent now and buy later will unfortunately find that home prices will rise in a corresponding manner, locking out the average buyer. Only the wealthy will be able to purchase a nice place, and only the wealthy will be able to easily afford to rent an attractive loft or apartment. The average renter will be forced to spend more than 30% of income on rent, or live with additional roommates.
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Corey Chambers, Realty Source Inc, BRE#01889449