Data Courtesy of CoStar™
Los Angeles apartment market conditions improved in early 2025 after remaining largely steady last year. Year to-date renter demand has been stronger than last year. However, recent stronger activity still represents among the most modest renter demand, relative to market size, recently seen among major U.S. metros. The market has had the saving grace of one of the most measured completion schedules nationally.
Relative economic softness, particularly job losses in the entertainment and tech sectors, and outmigration by residents continue to weigh on overall conditions. However, analyzing recent demand by asset quality demonstrates diverging renter activity. Higher-income renters seeking top-tier apartments have been the most significant driver of activity. More affluent renters have been better able to weather economic adversity and have contributed relatively less to outmigration than lower- and middle income households. Unfortunately for many owners, lower-to-middle income households comprise the lion's share of the renter pool.
One silver lining for local landlords is that they have encountered one of the most measured delivery schedules seen on a relative-size basis among U.S. apartment markets. Within the metro, the impact of the new additions] was uneven. Five submarkets with the greatest percentage unit growth during the past year saw around 60% of all new units. Those locations accounted for around 20% of existing units in Greater L.A.
12 Mo. Delivered Units
12 Mo. Absorption Units
Vacancy Rate
12 Mo. Asking Rent Growth
12 Mo. Sales Volume
Vacancy has declined from 5.0% at the end of 2024 to 5.3% during the third quarter. Recent renter demand has largely kept pace with the delivery schedule. All quality segments have seen occupancies improve in recent quarters, with demand highest in top-tier 4 & 5 Star communities.
Year-over-year, rents increased by 0.7%, compared to 1.0% national average rent growth. The pace of gains in the market remains modest and similar to the 0.6% yearover-year growth seen in the market four quarters ago. Recent momentum in Greater L.A. has been modest across the quality spectrum.
The recent fires in the L.A. metro have yet to dramatically impact market-wide fundamentals. The year-to-date improvement in renter demand and modest rent growth acceleration were forecast before early January.
Looking ahead, market fundamentals are expected to continue to see measured improvements. The outlook anticipates similar renter demand in 2025 compared to 2024. The pace of deliveries will slow due to the moderation in construction starts. The forecast calls for vacancy improvements through the rest of 2025. Given this outlook, rent growth is forecast to improve modestly, with annual growth reaching over 2% by next year.
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