Wages have gone up — but people still can't afford rent
Southern California wages are rising but a new report from University of Southern California shows that’s not going to make rents more affordable in the long run.
The annual USC Casden Real Estate Economics Forecast found that rents will keep rising over the next two years because the supply of apartments is tight and not enough new housing is coming online.
In Los Angeles County, average monthly rents are expected to rise to $2,373 by 2019 — up $136 from the 2017 average.
By 2019, monthly rents are also projected to jump $149 to $2,157 in Orange County; $124 to $1,573 in the Inland Empire; $121 to $2,048 in San Diego County, and $98 to $2,054 in Ventura County, according to the report.
Richard Green, director of the USC Lusk Center for Real Estate that prepared the report with Beacon Economics, said on the bright side, wages have been growing faster than housing prices over the last two years, making rents easier to stomach.
"But we started at such a bad place, it’s still really bad," Green said. "It’s just not quite as bad it was two years ago."
Green said it's unlikely that wages will keep climbing for more than another year.
"So income growth goes back to growing 2 percent a year and rents are going up 3 percent a year. You’ll see us starting to fall behind again," Green said.
Adding pressure to the rental market is that Los Angeles has one of the lowest home ownership rates of any major market. In some cases, it’s because people can’t afford to buy.
Bartender Thomas Rees is one of them. He said he can only afford his $1,400 a month apartment in Pasadena because his girlfriend, a massage therapist, has moved in with him.
"If we were to live on our own, I don’t think we could do it," Rees said. "You need two incomes."
Green said other renters are putting off home ownership because they are delaying marriage and families.