LA Rents Edge Down, But Supply Constraints Point to Future Tightening
The Los Angeles multifamily market demonstrated resilience in 2025 despite modest rent headwinds, with transaction activity reflecting strong investor confidence in the region's long-term fundamentals, according to a new JLL report on Q4 2025.
"We saw pricing hold firm across quality submarkets, particularly in transit-adjacent and amenity-driven locations, as the region's significant discount to homeownership and robust income growth projections continue to support sustained rental demand," Dillon Bergum, Senior Director, JLL, told GlobeSt.com.
"With the development pipeline moderating to nearly half its previous pace and Los Angeles delivering the second smallest share of new inventory among West Coast markets, supply-demand dynamics are positioned to tighten moving forward."
Effective Rents Slip By 0.6%
Los Angeles' apartment market softened in Q4, with effective rents slipping 0.6% year over year for buildings with 50 or more units as new deliveries again exceeded absorption.
Over the past five years, Los Angeles has added one of the smallest shares of new inventory among major West Coast markets, and its development pipeline is now set to contract.
After delivering more than 14% of existing stock since 2020, upcoming projects through the end of the decade account for just 6.6% of current inventory, roughly half the pace of the previous period.
Construction momentum continues to cool, with multifamily permitting falling to a 10year low in Q4 and fewer than 1,500 units approved.
When it comes to the five-year average of annual deliveries as a share of existing inventory (2020-2025), development remains cost-prohibitive in Los Angeles and Orange County. The two markets have delivered the fewest annual average units on the West Coast in the last five years. In Los Angeles, it's 0.8% of inventory; in Orange County, it is 0.9%. The national average is 2%.
Even so, the aerospace-adjacent South Bay and South Los Angeles submarkets outperformed the region, posting the strongest rent gains and highest occupancies.
A Shifting Population
In 2024, Los Angeles County experienced its largest net population change in at least the last decade, driven by a significant decrease in domestic outflows.
Additionally, the homeless population in 2024 in Los Angeles County and the City declined for the first time since the pandemic, as officials ramped up sheltering efforts ahead of the major events the city will host over the next four years.
Third-Highest Income Growth in the US
The Greater Los Angeles region (Los Angeles, Orange, and Ventura Counties combined) is forecasted to see the third-highest income growth in the country through 2030 at roughly 4%.
Southern California also boasts some of the highest income barriers to ownership in the country. In Orange and Los Angeles counties, the median household would need to earn 63% and 38% above the median, respectively, to qualify for a standard mortgage on a median-valued single-family home in 2025. The result is higher-income households remaining in the renter pool for longer.
Source: GlobeSt/ALM