|Housing Market Profiles|
| Los Angeles, California
Los Angeles diversified economy, varied landscape, and attractive weather continue to attract new residents. The population grew at a 1.7-percent annual rate to nearly 10 million between April 2000 and January 2003, up significantly from the 0.7-percent average annual growth rate recorded in the 1990s. Approximately three-fourths of the current growth is due to net natural increase, but international in-migration was also a major contributor. Los Angeles County currently has the highest population of any county in the nation, and the city of Los Angeles is the nations second largest city.
The economy in Los Angeles County has fared better than other areas in the state that depend more on technology-related employment. Los Angeles employment base includes tourism, the movie industry, government, aerospace, technology, manufacturing, shipping, and defense. Government is the single largest employer, and Kaiser Permanente and Boeing are the largest private employers. Nonagricultural employment averaged approximately 4.1 million for the 12 months ending June 2003, a 0.6-percent decline compared with a year earlier. State and local budget problems, in addition to a troubled airline industry, contributed to the decline. Manufacturing also declined more than 5 percent, but the sector still represented 13 percent of the countys total nonfarm employment. Small gains occurred in trades, transportation, and utilities. The June 2003 unemployment rate was 6.9 percent, a slight improvement compared with rate of 7.1 percent from a year ago.
Because of increased population growth and favorable interest rates the sales market remained strong throughout the county despite the areas economic weakness. DataQuick recorded total home sales of 269,119 for the 12-month period ending June 2003, 4 percent above the prior 12-month period. The median sales price for existing homes rose to $309,650 during the quarter. In response to the strong demand for homes single-family permit activity for the period totaled 9,400 homes, a 20-percent increase compared with 1 year earlier. Taken together the northern Los Angeles County cities of Lancaster, Palmdale, and Santa Clarita accounted for 21 percent of the countys single-family permit activity. The availability of larger land parcels with lower lot prices, compared to areas inside the Los Angeles city limits, has made northern Los Angeles County attractive to builders.
Conditions in the rental housing market eased slightly over the past year. Strong population and household growth combined with modest levels of new construction resulted in a 4-percent rental vacancy rate in the second quarter a year ago. During the current quarter vacancies increased to a more balanced 5.5 percent, with the majority of the increase in upper-end rental units caused by competition from the sales housing market. The rental market in the lower rent range remained very tight with vacancies below the 4-percent level. RealFacts reports that the average rent in the developments surveyed in the second quarter increased nearly 6 percent during the past year.
Multifamily production has fluctuated greatly over the past several years in response to economic conditions and demand for rental units. In 1990 permits were issued for more than 16,000 multifamily units. The number fell to an average of 4,200 units annually between 1992 and 1998. From 1999 through 2002 multifamily permit activity increased to 8,250 units annually. In the 12-month period ending June 2003 multifamily permit activity rose significantly in response to the tighter market conditions to a total of 10,900 units. This represents a 50-percent increase compared with the previous 12-month period. Nearly 60 percent of the activity is in the city of Los Angeles.
After more than a decade of recessions, bankruptcies, and mergers the market for commercial real estate in downtown Los Angeles has started to show signs of improvement owing to the strong demand for housing in the area. Empty office buildings are being converted into rental apartments and condominiums. According to the Downtown Center Business Improvement District nearly 5,000 units of market-rate housing could come on the market in the downtown Los Angeles area over the next 18 months. The estimate is based on 2,600 units currently under construction; another 2,200 units have either received building permits or submitted plans.
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