The average asking for rent for apartments in Los Angeles County fell last month from the previous year, according to RealPage, a major real estate data provider.
The 3.3% decline to an average of $ 2,254 for all sized units followed a 0.8% decline in April and reflects how the economic downturn associated with the corona virus is sweeping through the rental housing market.
Some landlords and property managers say they make concessions such as free rent for a month or drop the price required to get a unit filled when concerns about the economy grow.
According to RealPage data, the last rental that was refused was in 2010 after the Great Recession.
“We have a big drop in overall demand,” said Greg Willett, chief economist at the company, citing coronavirus.
Rental data have limitations because, unlike house prices, prices that tenants pay are not public records. Rental data from Zillow, for example, show that the rate of increase slowed in April, but rents have not dropped from the previous year, while May data is not yet available.
In addition, RealPage numbers include professionally managed apartments and thus ignore many landlords who charge lower rental fees.
RealPage data shows the decline is focused on the upper middle market, with so-called class B properties experiencing a 4.5% decline, while the top end, or class A, is down 3.5%.
The average rent in a class C apartment, usually an older, older property is basically flat, up 0.1%.
What happens with future leases depends on the overall direction of the economy.
More businesses have begun to reopen in the last few weeks. That could put more pressure on rent, but many economists expect recovery to be slow, especially if the reopening triggers a second wave of COVID-19 cases.
RealPage expects rents to fall further in L.A. County, with an annual decline of 5.6% in the first quarter of 2021.
The shift in the market came after a sharp increase over the years pushing some tenants out of their neighborhoods while shrinking other people’s budgets.
The increase in annual rental rates began to slow even before the coronavirus outbreak, which analysts attributed to the fact that many tenants were at their maximum.
As president of the property management firm Eberly Co., Chuck Eberly manages about 2,700 units in the Los Angeles area across the market spectrum from the upper class to the working class.
Eberly said he had to offer several weeks of free rent and in some cases immediately cancel the lease, mostly for his more expensive properties. Although he called the lease refusing “minor adjustments,” he hoped to be forced to make more road cuts.
“I see a lot of products now and not many viewers,” he said.
