Are these places the worst in America for renters or maybe the best places to be a landlord? I guess it all depends on your perspective. However, a recent article in Forbes identifies Los Angeles as the “worst city for renters” based on (among other factors) the average monthly price of $2,172 to rent an apartment – which they say is two-thirds higher than the national average. In addition, they go on to report that LA rent “eats up” 41% of the local median household income while vacancy is low, allowing “landlords to raise rents at a much faster pace than in most of the rest of the country.”
It sounds a lot like a textbook example of economics 101 with scarcity & high demand pushing up prices combined with a regulatory & governmental structure that makes it harder to add more supply. Look no further than in March of 2017 when voters soundly rejected a measure, put on the ballot by the mayor and city council, that would have placed an immediate moratorium on all new construction!
The Forbes list is interesting, especially when you consider half of the cities are in California….Which, you can then easily connect the dots and draw your own conclusions with that nugget.
“In L.A. buildable land is scare, what’ s available is expensive and getting permission to build on it is challenging. Meanwhile, many buildings are also being retrofit to better withstand earthquakes, sapping many construction dollars and workers from new building projects. All of this makes the cost of building high and pushes developers to focus on luxury buildings where they can charge a higher prices per square foot…”
HOWEVER
“…some residents argue, compared to other high cost cities, you get a lot for your money in L.A. For instance, a friend who moved there from New York says that while she pays slightly more for her L.A. apartment, she gets more space and amenities–she even has a parking space and backyard. Her one-bedroom costs $2,000 a month…”
In their take on the Forbes story, Realtor.com summed it all up quite nicely when they said:
“So is this just a case of landlords greedily squeezing tenants just because they can? On the contrary, most experts say that these cities just aren’t building enough new housing to keep up with population growth.”
AND
“It is fundamentally a problem of supply and demand,” says David Reiss, research director at the Center for Urban Business Entrepreneurship at Brooklyn Law School. “Certain urban centers like Los Angeles, San Francisco, and New York are magnets for people and businesses. At the same time, restrictive local land use regulations keep new housing construction at very low levels. Unless those constraints are loosened, hot cities will face housing shortages and high rents no matter what affordable housing programs and rent regulation regimes are implemented to help ameliorate the situation.”
Indeed….
So, here are Forbes’ top 15 worst areas for renters:
- Los Angeles, CA
- San Francisco, CA
- Manhattan, New York
- San Diego, CA
- Miami, FL (tie)
- Riverside-San Bernadino, CA (tie)
- Boston, MA
- San Jose, CA
- Orange County, CA
- Northern New Jersey
- Sacramento, CA
- Chicago, IL
- Oakland, CA
- Pittsburgh, PA
- Philadelphia, PA
Click here to read the full story on Forbes.com.
