Another article, this one in the L.A. Times here explains how rents are increasing. A nation still struggling to clear up one housing debacle has run smack into another — soaring rents.
The foreclosure mess has pushed millions of former homeowners with tarnished credit into a competitive apartment market across the U.S. Add fresh demand from young workers, few new units and tight standards for home loans, and the result is rental sticker shock not seen in years.
Rents are surging from New York to Los Angeles. The average monthly U.S. rent for apartments hit $1,008 in the first quarter, pushing past the all-time high set in the third quarter of 2008, according to the data firm RealFacts. USC’s Lusk Center for Real Estate forecasts a 10% jump in Los Angeles County rents over the next two years. In certain markets, it is now cheaper to own a home than rent.
According to Kolko, the second major factor leading to increased rents in these areas is an influx of new employment to the region. Many of these areas have experienced major growth in their job markets. When new workers move to a region, they are likely to seek rental properties over permanent residences until they know how stable their new jobs are.
This is especially the case following a recession, when new employees are not confident in their job security. “If you get a new job, it’s not like you go out the next day and buy a house,” he said. “You want to make sure that job is stable — that you’ve saved up for a down payment — before you decide to make that home purchase.”