LA Rents Spiked 65% But Income Didn't Keep Up Over Last Decade

LOS ANGELES, CA — Call it the decade of the renter. Over the last 10 years, renters have outnumbered homeowners in Los Angeles even though rents in Los Angeles saw a 65 percent increase — nearly double the national average. Despite the skyrocketing rents averaging $2,527 in Los Angeles, renters now make up 60% of the population in Los Angeles, according to a new report by RentCafe.

In some ways, the skyrocketing rents in Los Angeles are counterintuitive because household incomes have not caught up with the increased cost of living. While rents went up 65 percent over the last decade, the average household income in LA only rose by 36 percent in that time. However, it is in keeping with the larger national trend where the renter population grew twice as fast as the owner population, according to RentCafe.

The shift from homeownership to renting has quite literally reshaped the landscape in Los Angeles. Defined by decades of sprawl gobbing up the hillsides, Los Angeles is looking up to meet housing demand. Builders have started building smaller apartments in taller units encouraged by affordable housing incentives adopted by the city. Suddenly, Los Angeles is one of the biggest rental markets in the nation.

It was the shift brought on by the housing crisis that taught a generation to be leery of the pitfalls of home ownership. Even high-income earners who can afford to buy, are increasingly choosing to rent. It’s a trend contributing to the luxury rental market.

“An increasing number of Americans are renting as a lifestyle option—it's easier to move neighborhoods or cities when you’re not tied down to a mortgage,” RentCafe concluded. “However, since home prices upsurged in the nations’ priciest cities, lack of affordability also plays a role.”

The rising rents and lack of affordable homes to buy have coincided and likely led to the homeless epidemic that has overtaken Los Angeles over the last five years. The city has attempted to offset the problem by giving incentives to builders who include affordable units, but those units are still dwarfed by the sheer number of expensive units.

According to analysis by the Los Angeles Times, roughly 98,000 units were added to LA over the last 10 years with projects such as the 725 units being built across five seven-story apartment buildings in Chinatown or a 79-unit, eight-story building on Venice Boulevard. In the Venice Boulevard project, the builder was allowed to build nearly double the number of units zoning allowed for, but only eight were reserved for low-income renters, the Times found.

Apartments are getting smaller too. The average unit is 933 square feet, down from 990 square feet a decade ago.

Other surprising findings in the report were that the nation’s aging population is renting at higher rates than ever before. The number of renters who are 60-years-old and older went up by 32% in the past decade, dramatically outpacing the growth among young renters. Similarly, renters are increasingly choosing to rent in the suburbs, RentCafe found.

Rent control laws slated to take effect in 2020 aim to limit rent increases over then next decade to help tackle the state's affordability crisis.