Home prices have been stabilizing because of low inventory, and rents are skyrocketing as renters flood the market. While a combination of the foreclosure crises and the poor economic conditions, along with high unemployment in Los Angeles, have created a steady rise in rents for the past few years, rental prices have now increased at an even faster rate. Los Angeles has always had a high transient population, but now with an increased rental pool and continued slow production of new rental stock inventory, it is getting even more constrained. The ultimate effect of this supply and demand curve means higher rents.
There are many in this pool of renters that could become purchasers of homes, but they have suffered negative effects on their credit because of a foreclosure or short sale. In addition to not being able to purchase, this also puts them in a position to pay a higher rent because of the increased risk associated with bad credit.
Production in smaller apartment complexes has picked up over the last 6 to 9 months. Also, investment in units for Northeast Los Angeles is on the rise. The rent increase is a positive sign for the overall housing market and values. Though, many renters are not happy with this trend.
If you are a current homeowner and are in distress, consider a short sale before allowing the property to be foreclosed on. The effect on your credit is significantly reduced, and with today’s guidelines, you can purchase a home again within two years.
Contact me if you would like to discuss your options.