Small Multifamily Offers Most Affordable Rents in Greater Los Angeles
- Average rents in small multifamily and townhomes were consistently the lowest across the Greater Los Angeles region.
- Large multifamily and single-family rentals in Orange County were the most expensive rental options.
- Rent inflation has been most severe in large multifamily, especially in the region’s outer counties.
Small Multifamily is Relatively More Affordable
Affordability issues continue to grab headlines across the Greater LA region. Steep rents and slow inventory additions are weighing on household finances. They have also precipitated extreme outcomes such as co-living, bunk-bed rentals and rising homelessness.
Continuing with our deep-dive on the region’s rental market, here we examine average rent levels by asset class across Greater LA counties. The most recent data shows the critical role of small multifamily properties in offering more affordable rents in the region.
According to U.S. Census Bureau, average rent levels for small multifamily units in the region’s urban core (LA county), which forms the bulk of the region’s rental supply, stood at $1,319 per month through 2017.
On average, rents in small multifamily properties in the county were $170 less than in large multifamily properties, and $210 less than in single-family rentals (SFRs).
Orange County multifamily rents were 15% to 18% higher compared to LA county for large and small properties, respectively. SFR assets commanded a sizable 35% premium above similar properties in LA County, with rents of $2,066 per month, on average.
Townhome (2-4 units) and small multifamily buildings in Riverside and San Bernardino counties had the most affordable rents in Greater LA, charging roughly 20% below LA County levels.
Steeper Rent Increases in the Outer Counties
While SFR rents are the highest of any asset class in the region, the pace of rent growth is steepest for large multifamily properties, especially in most of the outer counties.
Between 2015 and 2017, rents in large apartment properties in Orange, Riverside, and San Bernardino counties shot up between 16% and 19%. In LA County, large multifamily rent prices grew by a less-extreme 8%.
Small multifamily rents grew slower across the region from 2015 to 2017. The asset class saw increases of 7% to 13% in the five Greater LA counties.
Small multifamily’s role as the rental market’s more affordable housing option makes a strong public policy case to preserve and promote this critically important asset class. As shown in our recent blog, LA has followed the national trend of increasing supply at the top-end of the market. At the same time, the share of small multifamily properties has dwindled, highlighting the urgency of the continued and growing affordability concerns.
For more multifamily trends and insights, visit the Chatter Blog.
Note: All data is sourced from the American Community Survey (ACS), unless otherwise stated. ACS statistics are sample-based estimates of the compositional profile of the total population in the given year of data collection, and include a margin of error.