The shrinking pandemic and blossoming reopenings most likely won’t result in rising rents anytime soon here in Pasadena, local Realtors interviewed by Pasadena Now said this week.
But for the first time since the stay home orders were issued in Pasadena, according to the just-released U.S. Bureau of Labor Statistics’ Consumer Price Index (CPI), the nation’s average rent inflation was up 1.7%, while CPI in Western states rose at a 1.6% pace.
Local inflation is still modest, according to the report. It was 3.4% in February 2020 and averaged 2.9% in 2016-2019. The numbers resemble post-Great Recession days when local inflation averaged 1.2% from 2009-2015.
So how does all of this affect rent? We asked a few local real estate experts for their take on the question.
“It’s a complicated story,” began Deasy Penner Podley Realtor and landlord Todd Hays.
“You have tenants and landlords who are being impacted and affected by COVID rules, which weren’t in place one year ago,” he said. “And most of those rules, which were considered to be temporary rules and restrictions, are still in place, and obviously COVID is still around. So, you’ve had some smaller than normal incremental rises in second tier housing rentals, whereas luxury rentals are still dropping. That could all be different 30 days from now.”
“It could be [even more] different still 60 days from now because some of these restrictions may change or go away in June. So it is a very fluid environment with respect to rents.”
Hays said he thinks tenants and landlords need to try to work together.
“Hopefully you have landlords who are being sensitive to the plight of their tenants and not raising rents, both out of respect for their tenants, but also concerned that they want their tenants to be happy, and pay their rent.”
Hays also said that the current demand for rentals “has been flat to… perhaps stopped.” When the market is flat to soft is not the time to raise rents, he said. Landlords should raise when the market is hot.
Adding to the picture are a multitude of different scenarios in the current market, said Hayes.
“It’s even more complicated now than it was a year ago,” he explained. “You have LA City that has one set of guidelines. You have the City of Pasadena that has one set of guidelines, and then you actually have County land that has a Pasadena address that goes by yet another set of guidelines.”
Every city has its own set of guidelines, said Hays, but are also dictated by state rules, and there may be other County guidelines as well.
While there were some modest regional rent increases in February 2020, Leon Khachooni of the Foothill Apartment Association attributed those to California’s passing of AB1482, Tenant Protection Act of 2019.
“From my perspective,” Khachooni wrote in an email, “many landlords who had never done annual increases for existing tenants, and who were in the habit of raising rents 2-3% every few years, realized they needed to get their rents up.”
Khachooni added, “The landlords I deal with the most are what many call “mom and pop” or small business landlords. Historically these landlords have done the majority of market price increases at rental turnover. In the lead up to the pandemic the Tenant Protection Act of 2019 changed all that.”
Khachooni said that he saw more than the usual amount of tenants moving over the 2020 holiday season.
“These were not evictions, mind you,” said Khachooni, “although I got the sense that many were motivated by the continuing unemployment coupled with the lack of any further federal unemployment support.”
Pasadena-area Realtor Adam Bray-Ali also noted that there are other restrictions on increasing rents in some types of properties, that aren’t just dictated by economics. Those might be subject to a different type of moral guideline, he said.
“There’s this sort of good consciousness,” said Bray-Ali, “of being a landlord in the middle of a pandemic that (says) you don’t want to start increasing people’s rents, but there’s also the portion of our market, where we have a number of people that are renters that are suffering economically during this time. And people that own those properties are in some cases increasing rents, I’m not doing it myself, but I am absolutely seeing it happen.”
