Rent costs in LA and OC rising at fastest pace in 11 years
Tenants in Los Angeles and Orange counties were hit with the fastest rate of rent inflation in 11 years in February, according to the local Consumer Price Index.
L.A.-O.C. rents, by CPI math, rose at a 5.5 percent annual pace last month. Here are five ways to show just how big that is …
It’s the biggest uptick since rents jumped 5.9 percent in January 2008.
It’s far above February’s regional inflation rate for all goods and services, which rose at a 2.5 percent annual pace.
It tops the national increase for rents (3.5 percent) and is the key reason why local inflation topped the U.S. rate of 1.5 percent, lowest since August 2016.
It’s the largest rent hike in February among two dozen metro areas tracked by the Bureau of Labor Statistics, just ahead of Atlanta’s 5.2 percent and San Diego’s 4.9 percent.
And it topped rent inflation contained in the new CPI for Riverside and San Bernardino counties (4.6 percent).
I’ll note that the CPI’s tracking of what it costs to be a renter is a bit different from other widely discussed industry measurements. These figures are derived from a survey of consumers, not by polling major landlords.
No matter the data, however, local renters have suffered from significant rent hikes in recent years. Why? Apartment supply hasn’t kept up with ballooning demand thanks to job creation and population growth.
By CPI math, local rents rose 4.9 percent in 2018; 5.1 percent in ’17; and 4.7 percent in ’16. The overall L.A.-O.C. inflation rate averaged 2.8 percent in those three years.
These rent-cost jumps were a sharp change from the days during and just after the Great Recession. Rent hikes averaged only 2 percent yearly from 2009 through 2015.
Local rents jumped on average 5.3 percent between 1999 and 2008, fast-growth years preceding the big downturn in the business climate.
Oddly, as rents rise this year, inflation elsewhere in the regional economy has cooled. February’s 2.5 percent annualized gain for overall L.A.-O.C. inflation is a 20-month low, down from 3.2 percent in January and 3.6 percent a year earlier.
How’d that happen?
Start with a major expense of life: gasoline. Pump prices are down 2.5 percent in the last 12 months, by CPI math. Plus, household energy costs rose by only 1.5 percent in the year.
Food costs were a mixed bag, depending on where you dined. The price of eating out rose a sharp 4.5 percent while eating at home rose only 0.1 percent. Surging restaurant wages are a key factor in this gap.
Shopping for clothing or big-ticket items was less painful to the local wallet. Apparel cost were 3.8 percent less and the prices of “durable goods” (such as appliances and furniture) fell by 0.5 percent over 12 months.
Oh, and some (relatively) good news if you were sick. Medical bills rose just 1.5 percent, according to the local CPI.
Inflation’s divergent paths add up to housing becoming an even bigger bite of the typical L.A.-O.C. household budget.
Ponder this telling statistic: If February’s CPI was calculated without the cost of shelter — not that you can easily avoid housing expenses — the local inflation rate would be a mere 0.8 percent.