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Hoping for a rent drop in Los Angeles this year? Unfortunately, it’s unlikely.
With continued demand and limited supply, rents are expected to remain high in 2025.
Let’s explore why LA’s rental market isn’t set to cool down anytime soon.
This article gives you valuable insights, but remember, it’s not and will never be investment advice. We pull data from a range of sources to provide you with the most accurate picture possible, yet we can’t guarantee complete accuracy. Markets are difficult to predict. Make sure to do your own research and consult a professional before making any financial moves. Any risks or losses are your own responsibility.
1) Actually, apartment rents in Los Angeles are expected to rise (+2%-4%)
Apartment rents in Los Angeles are projected to rise 2% to 4% annually through 2025, according to USC's Casden Multifamily Forecast.
This trend indicates increasing living costs due to factors like housing demand, economic conditions, and population growth.
The demand for housing outpaces supply as more people move to LA for jobs and lifestyle, driving rents up.
Economic growth also supports higher rents, as residents with more income are willing to pay more.
Given these factors, rents are unlikely to decrease by 2025, with the forecasted increases reinforcing the expectation of rising costs.
Sources: University of Southern California, Rentometer
- Yes, 2025 is a good time to buy property in Los Angeles
2) LA home prices are rising (+5.0%), so it's unlikely that owners will lower their rents
In September 2024, the median price of existing single-family homes in Los Angeles County reached $960,370, a 5.0% increase from the previous year.
This rise in property values often leads landlords to maintain or raise rents to reflect their investments' worth.
As property values climb, landlords are unlikely to lower rents, aiming instead to align them with the enhanced property value.
Consequently, the prospect of rent decreases in Los Angeles in 2025 appears slim, given the current trends.
Sources: Norada Real Estate Investments, California Association of Realtors (C.A.R.)
- No, Los Angeles homes prices won't drop in 2025
3) Los Angeles has a very low rental vacancy rate (5.0%)
As of Q2 2024, Los Angeles had a rental vacancy rate of 5.0%, up from 4.8% in 2023, indicating ongoing demand for rentals.
Despite this slight increase, a 5% vacancy rate suggests most properties are occupied, limiting potential rent decreases.
In a city where demand exceeds supply, even minor vacancy rises don't lead to lower rents.
Thus, rents in Los Angeles are unlikely to drop in 2025, as demand remains strong and vacancy rates low, leaving landlords little reason to reduce prices.
Adjust expectations if anticipating significant rent declines.
Source: Kidder
- Yes, running an Airbnb in Los Angeles is profitable in 2025
4) Only 11% of LA households can afford a median-priced home, pushing more residents into the rental market
As of Q3 2024, only 11% of Los Angeles County households could afford a median-priced home, requiring an annual income of $218,000.
This limits homeownership and pushes more residents into the rental market, increasing demand and supporting stable or rising rents.
Consequently, rents in Los Angeles are unlikely to decrease in 2025, as many residents will continue renting due to the affordability gap.
Source: California Association of Realtors (C.A.R.)
5) Inflation in Los Angeles (2-3%) is causing landlords to raise rents (because they face higher property maintenance costs)
Inflation rates in Los Angeles are around 2-3%, impacting the rental market by increasing property maintenance costs.
Landlords, facing higher expenses, are likely to raise rents to maintain profits.
As costs for repairs and utilities rise, rents follow suit to keep properties viable investments.
Consequently, rents in Los Angeles are unlikely to decrease by 2025, and renters should expect stable or rising prices due to ongoing economic pressures on landlords.
Source: Us Inflation Calculator
- No, rents will not go down in Los Angeles in 2025
6) Los Angeles housing supply lags behind demand, causing rising rents
In 2024, Los Angeles completed 3,671 new multifamily units by the second quarter, with 28,666 units still under construction.
Despite these efforts, the city's housing supply lags behind demand due to population growth and limited land for new construction.
This imbalance contributes to rising rents, and it's unlikely rents will decrease in 2025.
Until the city significantly boosts its housing stock, high rents are expected to persist.
Source: Kidder
7) Los Angeles is preparing for the 2028 Summer Olympics
Los Angeles is preparing for the 2028 Summer Olympics, focusing on new infrastructure and venues to boost its global profile.
This transformation is expected to attract tourists and new residents, increasing housing demand.
Tourists may opt for short-term rentals, tightening the market, while infrastructure improvements could draw new residents seeking opportunities.
Consequently, rents are unlikely to decrease by 2025.
The heightened demand from tourists and residents, along with ongoing developments, suggests a competitive housing market where landlords may raise rents rather than lower them.
Source: LAist
- Yes, Los Angeles is still a good place to invest in real estate in 2025
8) The homeownership rate in Los Angeles County is still low (47.9%)
The homeownership rate in Los Angeles County is 47.9%, the lowest among California's metro areas, indicating that less than half of residents own homes.
This low rate drives high demand for rental housing, allowing landlords to maintain or increase rental prices due to a steady stream of potential tenants.
Consequently, rents in Los Angeles are unlikely to decrease by 2025 without a significant rise in homeownership or housing supply.
Sources: USA Facts, United States Census Bureau
9) Gentrifying neighborhoods like the Arts District see their rents going up
In Los Angeles, gentrifying neighborhoods like the Arts District are seeing rising property values and rents due to increased investment and interest.
The influx of businesses and residents seeking proximity to new amenities drives this trend.
Diverse enterprises, from cafes to tech startups, attract more people, pushing property values and rents higher as demand outpaces supply.
Consequently, rents are unlikely to decrease by 2025, as ongoing gentrification and business development maintain strong housing demand amid limited space and high construction costs.
This dynamic makes a rent decrease improbable in the near future.
Source: Urbanize Los Angeles
10) The D Line Subway Extension Project in Los Angeles should boost rental demand
The Los Angeles County Metropolitan Transportation Authority (Metro) is expanding its transit network with the D Line Subway Extension Project, enhancing city connectivity and making neighborhoods more attractive to renters.
Improved public transit boosts rental demand in previously overlooked areas by offering convenient commuting options.
Consequently, Los Angeles rents are unlikely to decrease by 2025, as the transit expansion attracts more renters, sustaining or increasing rental prices.
The improved infrastructure supports a strong rental market, making rent decreases improbable.
Source: Metro
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So, will rents go down in Los Angeles by 2025? Unlikely!
Rents in Los Angeles are expected to remain high through 2025, with projections indicating a 2% to 4% annual increase according to USC's Casden Multifamily Forecast.
This trend is driven by several factors: strong housing demand outpacing supply, economic growth leading to higher incomes, and a low rental vacancy rate of 5.0%. These elements create a competitive rental market where landlords have little incentive to lower rents.
Additionally, the 2028 Summer Olympics preparations and infrastructure projects like the D Line Subway Extension are expected to attract more residents and tourists, further boosting demand. With only 11% of households able to afford a median-priced home, more people are pushed into the rental market, reinforcing the likelihood of stable or rising rents.