COMPREHENSIVE HOUSING MARKET ANALYSIS Metropolitan Division Series Focus on: Central Los Angeles,

U.S. Department of Housing and Urban Development Office of Policy Development and Research As of June 1, 2018

Summary

Housing Market Area Economy 5,175 new homes (Table 1), accounting for 24 percent of the total estimated The Los Angeles division economy demand in the Los Angeles division. has grown more than 7 consecutive Demand is expected to increase slightly years following the Great Recession. in the second and third years of the The economic expansion has slowed forecast period because of increased net San Luis Obispo recently, however, similar to the trends Kern in-migration. The 2,650 homes under in the region and Sa

n construction and the 61 condominium

ra

Bernardino

the nation. Nonfarm payrolls in the

units in planning in the HMA will

division increased by 59,400 jobs,

Los Angeles Ventura satisfy some of the forecast demand. Central or 1.3 percent, to 4.46 million jobs Los Angeles during the 12 months ending May 2018. An estimated 17 percent of total Rental Market Riverside Pacific Ocean Orange jobs in the division are in the Central Rental housing market conditions in Los Angeles HMA, up from 15 the HMA are balanced, and the

Di percent in 2000 because of significant vacancy rate is estimated at 4.5 percent,

redevelopment in DTLA. During down from 5.8 percent in 2010. An The Central Los Angeles Housing the 3-year forecast period, nonfarm increase in renter households since Market Area (HMA) is part of Los payrolls in the division are expected 2010 contributed to the absorption of Angeles County, which is coterminous to increase an average of 1.4 percent a excess vacant rental units. During the with the Los Angeles-Long Beach- year, partly supported by expansions forecast period, demand in the HMA is Glendale, CA Metropolitan Division in the HMA. expected for 12,000 new market-rate (hereafter, Los Angeles division). The rental units (Table 1), accounting for HMA is 13 miles from the Pacific Sales Market 40 percent of demand in the Los Ocean and encompasses approximately Angeles division. The 6,025 rental units 200 square miles of the center of Sales housing market conditions in the currently under construction and 528 Los Angeles County. Downtown Los HMA are balanced, with an estimated units in planning will meet all the Angeles (DTLA) and are 1.8-percent vacancy rate, down from in the HMA and are respective hubs 2.7 percent in 2010. During the next demand in the first year and part of the for financial and professional services 3 years, demand is estimated for demand in the second year of the and tourism in the southern California forecast period. region, a 10-county area that stretches from San Luis Obispo to the Mexican border. Market Details Economic Conditions ...... 2 Population and Households ...... 7 Housing Market Trends ...... 9 Data Profiles ...... 16 Central Los Angeles,CA • COMPREHENSIVE HOUSING MARKET ANALYSIS 2 Controller, 2017 Source: Note: Excludeslocal schooldistricts. * Los Angeles-Long Beach-Glendale,CA Metropolitan Division. TableMajor Employersinthe 2. Bank ofAmericaCorporation Providence HealthSystems The BoeingCompany The Kroger Company Target Brands Inc. Northrop GrummanCorporation California University ofSouthern Kaiser Permanente LosAngeles University ofCalifornia, City ofLosAngeles Name ofEmployer Summary Economic Conditions Los Angeles Business Journal BookofLists, Continued ® Los AngelesDivision* Financial activities Education &healthservices Manufacturing Wholesale &retail trade Wholesale &retail trade Manufacturing Education &healthservices Education &healthservices Government Government Nonfarm Payroll Sector Companies in DTLA include Bank of Companies inDTLAincludeBankof nearly 50,000professionalworkers. square feet,andhave acapacityfor Economics), ormorethan30million office spaceinthedivision (Beacon total skyline contain18percentof theiconicLosAngelesthat form skyscrapers andhigh-risebuildings since thelate1800s. Today, the34 intheLosAngeles divisionservices center forfinancialandprofessional a the HMAhasrepresented area of and tourismindustries. TheDTLA sional services, highereducation, known foritsfinancialandprofes- region, California in thesouthern Source: Estimatesbyanalyst The forecastperiodisJune1,2018,to2021. market attheendofforecastperiod.UnitsunderconstructionasJune1,2018. Notes: Total demandrepresentsestimatedproductionnecessarytoachieveabalanced * Los Angeles-Long Beach-Glendale,CA MetropolitanDivision. T Table 1. Under construction Total demand 2017-2018;Los Angeles City HMA isaneconomichub he CentralLosAngeles Central LosAngelesHMA Housing DemandintheLosAngelesDivision*and Sales Units 21,925 Los AngelesDivision* 4,600 Employees Number of 13,000 13,000 13,300 13,500 15,000 16,600 28,150 37,000 47,600 49,500 Rental Units During theForecast Period 18,725 29,850 Tourism andConvention Board). Angeles division (2018LosAngeles allvisitorstotheLos 39 percentof visitors annually, whichaccountsfor total, theHMAreceives 19million tourism in theHMA.In supports Fame andTCL Chinese Theater, also including theHollywood Walk of Center). Hollywood landmarks, (2018 LosAngeles Convention in economicimpactonthedivision annually andgenerates $781million which receives 2millionvisitors the LosAngeles Convention Center, The HMAisalsohometo California. division and53,425jobsthroughout indirectly 42,300jobsinthe supports (USC).USCdirectly and California $8billionon economic impactof withanannual sity inCalifornia, the oldestprivate researchuniver- (Table 2).Founded in1880,USCis (USC), with28,150employees California Southern University of private employer intheHMA, Central LosAngeles, is thelargest DTLA,inSouth 3 mileswest of activities sector. Approximately allHMAjobsinthefinancial of combined thataccountfor19percent with approximately 4,450employees Bank, andWells Fargo &Company, CityNational America Corporation, Sales Units Central LosAngelesHMA 2,650 5,175 Rental Units

12,000 6,025 Central Los Angeles,CA • COMPREHENSIVE HOUSING MARKET ANALYSIS 3 Figure 1. Source: U.S.BureauofLaborStatistics Note: Basedon12-monthaveragesthroughMay2018. * Los Angeles-Long Beach-Glendale,CA MetropolitanDivision. Figure 2.SectorGrowthinthe Source: U.S.Bureau ofLaborStatistics Note: Currentisbasedon12-month averagesthroughMay2018. * Los Angeles-Long Beach-Glendale, CA MetropolitanDivision. – 40 Economic Conditions Leisure &hospitality12.0% Education &healthservices18.0% by Sector Current NonfarmPayroll Jobsinthe – 30 Other services3.4% – 20 Gover – 10 nment 13.1% Continued

Los AngelesDivision,* 10 Mining, logging,&construction3.2% Professional &businessservices13.9% 17 percent of jobsinthedi 17 percentof the HMAaccountforanestimated Overall, payrolls totalnonfarm in jobs inthedivision areintheHMA. leisureandhospitality 20 percentof since 2000(Figure2).Approximately jobgrowth second largest sourceof in thedivision (Figure1)andthe largestcurrently sector thefourth The leisureandhospitalitysectoris 20 Manufacturing 7.8% Los AngelesDivision* 30 Financial activities5.0% Information 4.8% Wholesale &retail trade14.5% Transportation &utilities4.3% 40 PercentageChange,2000toCurrent 50 vision, up 60

70 80 readily available. division, forwhichannual dataare LosAngelesgrowth inthegreater HMA have by alsobeeninfluenced trends intheCentralLosAngeles 16 and15percentin2000.Economic currently live intheHMA,upfrom resident workers inthedivision respectively, thelaborforceand of Approximately 18and17percent, resident workers living intheHMA. theDivision’sof laborforceand proportion contributed toagreater Redevelopment have efforts also payrolls inthedivision since2000. thenetgrowth innonfarm of jobs andaccountedfor41percent sectors addedanestimated137,700 sectors.services Combined,these and theprofessionalbusiness the mining, logging, andconstruction; theleisureandhospitality; services; growth intheeducationandhealth in DTLAthatcontributedtoHMA attributed torevitalization efforts since2000ispartly the proportion from 15percentin2000.Thegain Total nonfarmpayroll jobs Service-providing sectors Goods-producing sectors Education &healthservices Professional &businessservices Financial activities Transportation &utilities Wholesale &retail trade Manufacturing Government Other services Leisure &hospitality Mining, logging,&construction Information Central Los Angeles,CA • COMPREHENSIVE HOUSING MARKET ANALYSIS 4 Economic Conditions Continued Recession began,and payrolls in 2007,theGreat By theendof 1.6 percentayear. which expanded byanaverage of region, California in thesouthern growth but was below therateof rate asthenationduring period in thedivision increasedatthesame in thesubsector. Overall, jobgrowth period partly contributedtothegain the conditions duringmostof from strongsaleshousingmarket Greater residentialbuildingactivity subsector.gains intheconstruction jobs, annually, entirely becauseof 3.9percent,or by5,700 average of the largest percentage gain,upan sector had logging, andconstruction 1.7 percent,annually. Themining, and 10,400jobs, or3.4,1.7,and up respectively by19,400, 10,000, wholesale andretailtradesectors, and businessservices, andthe health services, theprofessional intheeducationand occurred theentirenetgain 88 percentof 2004 through2007.Approximately jobs, or1.1percent,annually from was 45,300 upbyanaverage of strengthen, andpayroll growth By 2004,theeconomy beganto 13,500 jobs, or7.5percent,ayear. in whichindustrieslostacombined involved inhigh-techproduction, resulted fromlayoffs atcompanies thenetdeclineinpayrolls of industry. Approximately 40percent inthetechnology downturn million, inresponsetothenational 0.8 percent,ayear tonearly 4.07 34,000jobs,by anaverage or of payrollswhen nonfarm declined from2002through2003, occurred however. Thefirstcontraction contraction, by two periodsof during theperiodwas limited percent, ayear. Overall jobgrowth 19,400jobs,an average or0.5 of division economy hasexpanded by Since 2000,theLosAngeles Universal Studios Hollywood theme the The $500million expansion of in thedivision duringtheperiod. thetotaljobgain two-thirds of combined, accountedfornearly professional andbusinesssectors, leisure andhospitality, andthe education andhealthservices, the which was 2.2percentayear. The region, California in thesouthern growth but was below thepaceof the nationfrom2011through2016 faster thanthe1.7-percentratefor in theLosAngeles division was jobgrowth 2015.Therateof of levelsprerecessionary bytheend payrolls inthedivision surpassing decade. Thispaceledtononfarm than growth duringtheprevious 4.39 million,whichwas faster from 2011through2016tonearly 77,800 jobs, or1.9percent,annually division expanded byanaverage of payrollscontraction, nonfarm inthe Following theeconomic 1.1 percent,respectively, ayear. were down 1.8and averages of nation duringtheperiod,which regionandthe California southern was much moresevere thaninthe joblossinthedivision the rateof housing development. Overall, subsector inresponsetoreduced from reductionsintheconstruction sectorresulted and construction thelossinmining, logging, of manufacturing sector. Three-fourths thedeclinein for 62percentof company relocationsaccounted apparel manufacturing causedby sectors. A15,500-jobreductionin and thewholesaleretailtrade professional andbusinessservices; the logging, andconstruction; in themanufacturing; themining, thenetlossesoccurred percent of 3.92 million.Approximately 82 year from2008through2010to 109,600jobs, or2.7percent,a of the division declinedbyanaverage

Central Los Angeles,CA • COMPREHENSIVE HOUSING MARKET ANALYSIS 5 Table12-Month Average NonfarmPayroll 3. Jobsinthe Source: U.S. BureauofLabor Statistics through May2017 andMay2018. Notes: Numbers maynotaddtototals because ofrounding. Based on12-monthaverages * Los Angeles-Long Beach-Glendale,CA MetropolitanDivision. Total nonfarmpayroll jobs Service-providing sectors Goods-producing sectors Government Other services Leisure &hospitality Education &healthservices Professional &businessservices Financial activities Information Transportation &utilities Wholesale &retail trade Manufacturing Mining, logging,&construction Economic Conditions Division*

by Sector Continued 3,910,800 4,403,400 May 2017 580,700 154,100 516,300 778,500 605,900 220,100 222,200 186,400 646,700 355,300 137,300 492,600 12 MonthsEnding and contributedtothedecrease led toacombined2,250layoffs BCBG MaxAzriaGroup, LLC AmericanApparel,Inc. and of the past12months. Theclosure 5,700 jobs, or1.6percent,during in manufacturing payrolls of jobs, or12.8percent,leddeclines industry, whichwas down by4,500 in theapparelmanufacturing contractions the division. Further the mosttoslowed growth in sectorcontributed information sector andacontractioninthe losses inthemanufacturing the nation,1.5percent.Continued region,1.6percent,and California growth thesouthern the rateof division was lower thanboth (Table 3).Overall, growth inthe with theprevious 12-monthperiod months endingMay 2018compared to 4.46millionjobsduringthe12 up by59,400jobs, or1.3percent, but ataslower pace. Payrolls were division have continued toexpand payrollsSince 2016,nonfarm inthe to overall gains. and hospitalitysector, contributing whichwere intheleisure of portion park in2016added2,000jobs, a 3,970,600 4,462,800 May2018 585,800 153,100 533,400 802,700 619,700 221,700 214,100 193,900 646,100 349,600 142,600 492,300 Los Angeles Los Angeles Absolute – 1,000 – 8,100 – 5,700 Change 17,100 24,200 13,800 59,800 59,400 5,100 1,600 7,500 5,300 – 600 -300 Change Percent – 0.6 – 3.6 – 0.1 – 1.6 – 0.1 0.9 3.3 3.1 2.3 0.7 4.0 1.5 3.9 1.3 portion of the totalanticipated of portion Grand Center inJune 2017; a Downtown hotelintheWilshire InterContinental LosAngeles openings includethe889-room & Convention Board).Recent $22.0 billion(LosAngeles Tourism spending increasedtoarecord visitors in2017,whilevisitor division, peakingat48.3million visitorstothe in thenumber of byanincrease been supported had in DTLA.Hotelconstruction 1,330rooms, opened with atotalof thesehotels, 800 jobs. Threeof and addingmorethan California allhotelopeningsin of one-fourth since June 2017,accountingfor billion have opened inthedivision nearly $1.2 14 hotelsatacostof In theleisureandhospitalitysector, jobs already filled. theexpected 8,000permanent of 2017intheHMA,withaportion of $700 millionUSCVillage inthefall the was attributedtotheopeningof sector education andhealthservices thegrowth inthe division. Part of to overall payroll growth inthe percent, respectively, contributing 13,800 jobs, or3.1,3.3,and2.3 were upby24,200,17,100,and sectors,and businessservices which hospitality, andtheprofessional health services, theleisureand intheeducationand also occurred jobs, or5.7percent.Notablegains decline, whichwas upby1,300 the partly offsetsomeof industry Growth inthebroadcasting 2017, contributingtothereduction. combined 100layoffs sinceJune GroupInc. hada Services Inc. andDeluxe Entertainment recording industries. Warner Music, in themotionpictureandsound job, ora6.6-percent,decrease a9,200- 3.6 percent,becauseof sector was down by8,100jobs, or in theindustry. Theinformation Central Los Angeles,CA • COMPREHENSIVE HOUSING MARKET ANALYSIS 6 Source: U.S.Bureau ofLaborStatistics * Los Angeles-Long Beach-Glendale,CA MetropolitanDivision. Figure 3. Labor force and esident employment 3,835,000 4,035,000 4,235,000 4,435,000 4,635,000 4,835,000 5,035,000 5,235,000 5,435,000 Economic Conditions Unemployment Rateinthe Trends inLaborForce,ResidentEmployment,and 2000 Through2017 Labor force 2000

2001

2002

2003

2004

2005 Continued

Resident employment 2006

2007

2008 Los AngelesDivision,* decreased because of highergrowth decreased becauseof unemployment rateinthedivision 4.1-percent rateforthenation.The regionandthe California southern above the4.3-percentratefor unemploymentThe current rateis from 5.0percentayear earlier. decreased to4.5percent,down the average unemployment rate the 12monthsendingMay 2018, division continued toexpand during theLosAngeles As theeconomy of Development Department). Employment California (State of demand forprofessionalservices since mid-2017inresponsetogreater 1,800 jobsthroughoutthedivision Randstad USA,have addednearly Inc. and International Half staffing agencies, includingRobert gain inthesector. Professional thejob of accounted forone-half industry services and support or 2.7percent,intheadministrative 6,900jobs, sector, theadditionof professional andbusinessservices 1,950 professionalworkers. Inthe with acapacityforapproximately belowspace onfloors thehotel, office than 350,000squarefeetof in thenation,andincludesmore 10thlargest building inCalifornia, Center currently standsasthetallest been added.TheWilshire Grand jobshasalready1,750 permanent 2009

2010

2011

2012

2013

2014 Unemployment rate 2015

2016

2017 10.0 12.0 14.0 0.0 2.0 4.0 6.0 8.0

Unemployment rate will behosted intheHMA. which the 2022SuperBowl, bothof League BaseballAll-StarGame and by theupcoming2020Major tourism, whichispartly supported resulted fromanticipatedgrowth in has hotelconstruction Current jobswhen complete.permanent jobs duringbuildoutand200 approximately 6,000construction hoteltower,and a40-story adding convention space square feetof 2019 isexpected toadd350,000 in Center thatisplannedtostart theLosAngeles Convention of addition, a$1.2billionexpansion than 280jobswhencomplete. In DTLA, whichwilladdmore underway, themwillbein 5of thehotels 2019.Of the endof 10,000 jobswhencompleteby expected toaddapproximately nearly $1.2billion,whichare of throughout thedivision atacost 31 hotelsareunderconstruction the leisureandhospitalitysector, the forecastperiodandbeyond. In the HMAatUSCVillage through jobsplannedin 8,000 permanent is expected tocontinue fillingthe gains duringthenext 3years. USC to contributeoverall payroll hospitality sectorsareanticipated andtheleisure health services Expansions intheeducationand reduced lossesinmanufacturing. recent growth ratebecauseof annually, slightly higherthanthe 62,200jobs, or1.4percent, of expected toincreasebyanaverage payrollsnonfarm inthedivision are During the3-year forecastperiod, from 2000through2017. unemployment rateinthe division employment, andtheaverage trends inthelaborforce, resident to thelaborforce. Figure3shows in residentemployment relative Central Los Angeles,CA • COMPREHENSIVE HOUSING MARKET ANALYSIS 7 Population andHouseholds HMA, with 99,900 residents. 99,900 residents. with HMA, the in contained entirely city only the is Angeles, Los Central South in of Compton, city The HMA. the in reside 1.82 or million, population, Angeles of Los city of the percent 45 estimated An Angeles. Los Central South and East both in areas and Hollywood, of DTLA, hoods neighbor HMA the includes city The of Finance). Department (California 2018 of January as residents million 4.05 with division, Angeles Los the in city largest the is HMA, the in tained con partly is which Angeles, Los of city The report). of this end the at (Table DP-1 10.3 at million estimated population which a has current division, Angeles Los the in population of the 19 percent approximately for accounts HMA the Overall, 1, of June as 2018. 1.93at million T (USC data).During the2000s, andthenation outside California new studentscomefrom percent of HMA, whereapproximately 57 fromthe the netout-migration have helped tooffsetsomeof 2000. StudentsattendingUSC theperiodsince during mostof year-over-year netout-migration minus resident deaths)becauseof natural increase(residentbirths bynet division hasbeensupported growth intheHMAand division. Generally, population LosAngelesHMA andthegreater population growth inboththe andoveralltrends inmigration housing priceshave influenced lendingstandards,mortgage and 2000, economicconditions, theperiodsince During mostof Los Angeles HMA is estimated estimated is HMA Angeles Los Central of the he population

- - parts of the southern California California the southern of parts economy andhousing marketsin elsewhere slowed slightly asthe from theHMAtopurchase homes residentsaway2008, thedraw of decline since2000.Bytheend of population the only periodof 4,625,or0.3percent,annually,of average annual populationdecline 26,200 peopleayear, leadingtoan surgedmigration toanaverage of From 2004to2007,netout- $124,000 lessthanintheHMA. developed atpricesthataveraged and neighborhoodswere being data),wherenewmigration homes RevenueCounties (Internal Service to Riverside andSanBernardino theHMAmoved Angeles areasof the EastandSouthCentralLos division. Residents previously in the HMAandLosAngeles residents moving away from homebuying andasurge in conditions contributedtoincreased standards andstrongeconomic 2004, lenientmortgage-lending people ayear. Bytheendof from theHMAaveraged 15,350 to 2004,whilenetout-migration or 0.4percent,ayear from2000 the HMAaveraged 6,425people, contraction, populationgrowth in that includesaneconomic During theearly 2000s, aperiod totheHMA. migration to residentsandpositively impacted the neighborhoodmoreattractive space toresidentialuse, hasmade office including theconversion of Extensive redevelopment inDTLA, to 6,700studentssince2010. USC, anumber thathasincreased andthenationtoattend California 2,850 studentscamefromoutside Central Los Angeles,CA • COMPREHENSIVE HOUSING MARKET ANALYSIS 8 Population andHouseholds Components ofPopulationChangeintheCentral Figure 5. estimates byanalyst Sources: 2000and2010—2000Census2010Census;current forecast— Notes: ThecurrentdateisJune1,2018.forecast2021. estimates byanalyst Sources: 2000and 2010—2000Censusand2010Census; currentandforecast— Notes: Thecurrent dateisJune1,2018.Theforecast dateisJune1,2021. Figure 4.PopulationandHouseholdGrowthintheCentral verage annual change verage annual change –25,000 –20,000 –15,000 –10,000 10,000 12,000 14,000 16,000 18,000 10,000 15,000 20,000 25,000 –5,000 2,000 4,000 6,000 8,000 5,000

Los AngelesHMA,2000toForecast Los AngelesHMA,2000toForecast 2000 to2010 2000 to2010 Net naturalchange Continued Population redevelopment inDTLA,and 2016, aseconomicconditions, growth would since expand further people, or0.8percent.Population population growth averaged 14,100 averaged 2,450peopleayear, and 2010 to2016,netout-migration lowest levels since2000.From slowednet out-migration tothe themtostay,HMA orinfluence began todraw residentstothe DTLA redevelopmentgreater of 2010and improve bytheendof As economicconditionsbeganto percent, ayear. averaged 1,925people, or0.1 annually, andpopulationgrowth 18,500people 2010 toanaverage of slowedmigration from2007to region begantoweaken. Netout- 2010 tocurrent 2010 tocurrent Households Net migration Current toforecast Current toforecast forecast date. in theHMAfrom2000to populationchange components of Angeles division. Figure5 shows theLos the totalpopulationof account fornearly 19percentof the 3-year forecastperiodand reach 1.98millionbytheendof theHMAisestimatedto of Thepopulation net in-migration. continued(Figure 4),reflecting 17,000,or0.9percent,ayear of expected toincreasebyanaverage theHMAis population of During thenext 3years, the growth since2000. or 0.9percent,thehighestlevel of growth hasaveraged 16,850people, year since2016,whilepopulation HMA hasaveraged 2,650peoplea tothe since 2000.Netin-migration forthefirsttime net in-migration attending USCwould support students numbera greater of 2010, compared with an average average an 2010, with compared since ayear of 4,000 average an by increased has households renter of number The growth. household renter greater to leading difficult, more homeownership have made requirements lending tighter and prices home sales higher because 2010, in partly 70.5 percent from 71.9 to up rose percent, HMA the in households of renter proportion The 16.7 2000. in from percent up division, Angeles Los the in 17.1 households of total percent for accounts currently HMA The 2000s. the during annually, percent, 0.4 or of 2,300, increase average an 2010 with since compared annually 0.8 or percent, of 4,250, 579,600, at average up an estimated currently is HMA the in households of number The 2000s. the with compared growth household greater to contributed 2010 also since has HMA the into migration Improved Central Los Angeles,CA • COMPREHENSIVE HOUSING MARKET ANALYSIS 9 Population andHouseholds Housing Market TrendsHousing Sources: 2000and2010—2000Census2010Census;current—estimates byanalyst Note: ThecurrentdateisJune1,2018. Number ofHouseholdsbyTenureFigure 6. intheCentral 100,000 150,000 200,000 250,000 300,000 350,000 400,000 450,000 50,000

Los AngelesHMA,2000toCurrent 2000 Continued Renter households only account for account only households student of growth, share the Despite 2000s. the during 3 percent with compared households, student to attributed 2010 been since has HMA the in growth household renter of 18 percent 2010. estimated An since households of renter proportion increased the to contributed also USC, at enrollment increased from partly growth, household Student 2000s. the of 1,975 during ayear attract orsustain households. A andnoredevelopmentmigration to was aperiodwithhighnetout- the2000s 2000 (Table DP-2);most of percent in2010and3.4 in currently 1.8percent,down from2.7 The estimatedsalesvacancy rateis 2007through2011. from theendof market contractionthatoccurred improving every year sincethesales housing marketisbalanced, The CentralLosAngeles HMAsales Sales Market 2010 Owner Current demand during the forecast. the during demand housing student-rental in growth reduce to expected are completions 2010 USC dormitory since because than alower proportion 3 years, next the during growth household of renter 12 percent approximately for account to expected is HMA the in growth household Student division. Angeles Los the in households renter of all percent 23 for account to continue and period forecast of the end the by HMA the in households of total percent 72.2 to increase to expected are households Renter division. Angeles Los the in households of total percent 17.3 for accounting 594,000, to annually 0.8 or percent, of 4,800, average an by grow to expected is HMA the in of households number the period, forecast the During 2000. since HMA the in tenure by households of number 6shows the Figure HMA. the in households renter of total 5 percent approximately higher development levels since2010. homes forsale that morethanoffset households andinvestor purchasesof owner in boththenumber of inventory levels resultedfromgrowth decline inthevacancy rate. Lower (CoreLogic, Inc.), contributedtothe 12 monthsendingMay 2018 was weakest, to3,825duringthe 8,050 during2008,whenthemarket homesforsale, fromapeakof of 52-percent reductionintheinventory Central Los Angeles,CA • COMPREHENSIVE HOUSING MARKET ANALYSIS 10 Sales MarketContinued Market TrendsHousing 2012, following nearly 2 years of 2012, following nearly 2years of The salesmarketbegantoimprove by 2011. the endof 11 percentin2000to18 by investor purchases, whichrosefrom attributed toanincreasingshareof the gaininREOsaleswas of Part through 2011,offsetthisreduction. 3,100 soldannually from2007 2000 through2006toanaverage of 680soldannuallyaverage from of home sales, whichrosefroman Growth inrealestateowned (REO) 2011,or52percent. by theendof 1,350in2006to640 from apeakof percent. New homesales declined resales reducedby9,450,or67 through 2011declined,andregular the 2000s, homesalesfrom2007 the economy contractedbytheendof As lendingstandardstightenedand homes duringtheearly tomid-2000s. householdstopurchase of proportion standards thatallowed alarger lending from lenientmortgage period. Highersaleslevels resulted the duringmostof out-migration net levels2000 despitegreater of which was thehighestaverage since annually from2000through2006, 15,350homessold average of sold was down 44percentfroman homes the analyst). Thenumber of (CoreLogic, Inc., withadjustmentsby contraction from2007through2011 the HMAduringsalesmarket condominiums were soldannually in single-family homes, townhomes, and 8,550new andexistingAn average of renterhouseholdgrowth. greater from 29.5percentin2010becauseof rate iscurrently 28.1percent,down market conditions, the homeownership during 2008.Despiteimproved sales 4.6months compared withahighof 12 monthsendingMay 2018, 2.3monthsduringthe to anaverage of remained onthemarkethasdeclined monthshomes the number of As salesmarketconditionsimproved, condominium pricesareamong previous 12months. InDTLA,new percent from$882,800 duringthe 6 the 12monthsendingMay 2018,up $933,000during reached ahighof price fornew condominiums 2012 through2016,theaverage sales 10percentayearaverage from of price growth. Afterincreasingbyan 12 months, to strong dueinpart 9 percentfromtheprevious new condominiumsaleswas down inDTLA.Thenumberoccurring of thesesales 2018, with90percentof during the12monthsendingMay new condominiumsalestotaled250 Currently, recentnew construction. of which hascomprisedasignificantpart density residentialconstruction, redevelopment higher- hassupported home salesintheHMAbecause new accounted for84percentof sales, however, condominiums have Company). With respecttonew home percent (Metrostudy, AHanleyWood accounting fortheremaining14 townhomes, withcondominiumsales have beeneithersingle-family or sales intheHMAsincemid-2000s allhome Approximately 86 percent of decline inREOsales. that offseta250-home, or53-percent, 7-percent, increaseinregularresales was attributedtoa610-home, or ending May 2017.Theentiregain up 3percentfromthe12months ending May 2018,10,000homessold, increase, andduringthe12months home saleshave continued to relatively unchanged. Since2016, while new homesalesremained 570,or31percent, in REOsalesof offsetting anaverage annual reduction theincreaseentirely,supported regular resales, or10percent, 9,625. Anaverage 680 annual gainof home salesrosetoanaverage of 2012 through2016,new andexisting and stronger economicgrowth. From significantly lower netout-migration

Central Los Angeles,CA • COMPREHENSIVE HOUSING MARKET ANALYSIS 11 Sales MarketContinued Market TrendsHousing HMA was seriously delinquent or had homeloansinthe 1.5 percentof May 2018, REO properties. Asof delinquent orinforeclosure) and loans (loansthatare90ormore days seriously delinquenthome rate of since 2012hasledtoareductioninthe housing marketconditionsintheHMA The overall improvement insales prices intheLosAngeles division. that is13percentlower thanaverage division, withanaverage salesprice housing marketsintheLosAngeles themoreaffordable the HMAisoneof andRiversideBernardino Counties, 81 percenthighercomparedwithSan overall homepricesintheHMAare as themarketimproved. Although percent in2012to6by2016 REO homesalesdeclinedfrom28 $566,000by2016,astheshareof of peak theprerecessionary and surpassed increasing eachyear in2012, starting Homesalespricesbegan period. salesduringthe at 36percent,of resales, share, accounted for a greater were priced41percentbelow regular because REOhomesales, which $456,400from2004through2006 of through 2011,down fromanaverage from2007housing downturn averaged $376,100duringthe 12 percent,annually. Homeprices pricegrowth thataveragedyears of to $668,900,following 6consecutive during the12monthsendingMay 2018 condominiums, rising10percent homes followed trendssimilartonew Overall, pricesfornew andexisting 2012 through2016. condominiums soldannually from nearly 130 doubletheaverage of condominiums soldintheHMAis new prices, number thecurrent of increasing the area.Despitesharply condominiums beingcompletedin luxury number agreater of of from $973,200ayear agobecause nearly $1.1million,up8percent the highestinHMA,averaging data; estimatesbytheanalyst). period ayear earlier(preliminary duringthesame homes permitted compared with1,375 permitted ending May 2018,1,150homeswere homes in2017.Duringthe12months percent, annually, reaching1,325 160homes,an average or 30 of almost every year since2010,upby DTLA. Permitting hasincreased $81,150less thanin are anaverage of theHMA,wherenew homes areas of housing demandinthesurrounding sales DTLA hascausedgreater (Figure 7),becauseredevelopment in similar totheearly-to-mid 2000s activity hasincreasedtohigherlevels, 210 by2010.Recently, homebuilding 160 homes, annually, toalow of before decliningbyanaverage of sales marketconditionsthatyear, 850 homesdespiterelatively strong building activity slowed by2006to the housingboom.Single-family 2003 through2005,aperiodduring 1,200homesayearaverage from of through 2002beforeincreasingtoan annuallypermitted from2000 2000s, 900homes were anaverage of division since2000.Duringtheearly intheLosAngeles construction allsingle-family 13 percentof the HMAhasaccountedforonly single-family in homespermitted, of activity, asmeasuredbythenumber Single-family building construction. land forlower-density residential Angeles, wherethereisavailable infill including EastandSouthCentralLos DTLA, the areassurrounding the HMAisgenerally concentratedin in Single-family homeconstruction for thenation. and isthebelow the2.0-percentrate Los Angeles division andCalifornia above the0.9-percentrateforboth (CoreLogic, Inc.). rateis Thecurrent 2010 17.6 percent in February peak of from 2.0percentinMay 2017 anda transitioned intoREOstatus, down Central Los Angeles,CA • COMPREHENSIVE HOUSING MARKET ANALYSIS 12 Sales MarketContinued Market TrendsHousing in bothHollywood andDTLA. includes condominiumdevelopments homes. Additionalfor-salehousing at$739,000forthree-bedroom start been completedandwithpricesthat buildout, with41homesthathave DTLA, isplannedfor95homesat bedroom homes. RiverPark, of north in thelowstart $500,000sforthree- remaining market-ratehomeswill three-bedroom homes, whilethe in themid$200,000sfor start moderate incomeswithpricesthat reserved forthosewithlow-to- homes willbe Thirty construction. 3 homescompleteand28unitsunder single-family homes atbuildout,with Central LosAngeles isplannedfor94 in DTLA.MagnoliaWalk inSouth rail linesthatfacilitateaccesstojobs convenient accesstothe commuter HMA, particularly locationswith the in relatively low-density of parts areconcentrated under construction single-family developments currently Consistent withrecenttrends, notable Sources: U.S.CensusBureau,BuildingPermitsSurvey;estimatesbyanalyst Notes: Includestownhomes.CurrentincludesdatathroughMay2018. Single-Family HomesPermittedintheCentralLosAngeles Figure 7. Estimated DemandforNewMarket-RateSalesHousingin Table 4. Source: Estimates byanalyst under construction inthesubmarketwilllikelysatisfy someoftheforecastdemand. Notes: Numbers may notaddtototalsbecauseof rounding.The2,650homescurrently 10,000 12,000 14,000 2,000 4,000 6,000 8,000

880,000 780,000 680,000 580,000 480,000

the CentralLosAngelesHMA 2000 HMA, 2000toCurrent From

2001 Price Range($)

2002

2003 and higher

2004 879,999 779,999 679,999 579,999

To 2005

2006

2007

2008

demand bypricerange. second year. Table 4shows estimated demandinthe year of andaportion meet allthedemandduringfirst condominium unitsinplanningwill andthe61 construction The 2,650homescurrently under netin-migration. response togreater the3-year forecast periodin years of to increaseinthesecondandthird Angeles division. Demandis expected totaldemandintheLos percent of HMA (Table 1),accountingfor24 estimated for5,175new homesinthe During thenext 3years, demandis and $900,000forone-bedroomunits. at$600,000forstudiounits starting 2018, with310condominiums Angeles was completedearlierin tower38-story MetropolisLos two-bedroom units. InDTLA,the inthe$700,000sfor Prices willstart expected tobecompletelaterin2018. units plannedatbuildoutandis Cahuenga 18,inHollywood, has18 2009 During theForecast Period Demand Units of 1,025 1,025 1,550 2010 770 770

2011

2012

2013

2014 Percent

of Total 2015 15.0 15.0 20.0 20.0 30.0 2016

2017

2018 Central Los Angeles,CA • COMPREHENSIVE HOUSING MARKET ANALYSIS 13 Sources: 2000and2010—2000 Censusand 2010Census;current—estimates byanalyst Note: Thecurrent dateisJune1,2018. RentalVacancy RatesintheCentralLosAngelesHMA, Figure 8. Rental Market Market TrendsHousing 0.0 1.0 2.0 3.0 4.0 5.0 6.0 2000 toCurrent 2000 4.3 point fromayear earlierexcept for bedroom categoriesby0.1percentage Inc.). Vacancy ratesdeclinedinall for aone-bedroomhome(CoreLogic, percent a four-bedroomhometo1.6 April 2018ranged from1.5percentfor single-family rentalhomesduring is currently tight.Vacancy ratesfor rental marketforsingle-family homes rental useduringtheperiod,and single-family homesfor number of contributed tothereductionin Stronger salesmarketconditions 1,625 rentalhomesduringtheperiod. adeclineof in 2010,representing rentals in2016,down from33percent single-family homes in the HMA were occupied An estimated30percentof sales marketconditionsimproved. available as forrent,whichoccurred by adeclineinsingle-family homes growth, however, was partly offset therentalinventory units. Someof excess rental of to theabsorption growth in therentalinventory, leading renter householdgrowth exceeded the vacancy ratedeclinedbecause buildings toresidentialuseinDTLA, nonresidential and conversion of construction apartment levels of 2010 (Figure8).Despitesignificant 4.5 percent,down from5.8percentin rate currently isestimatedat balanced. Theoverall rentalvacancy Central LosAngeles HMAis The rentalhousingmarketinthe Rental Market 2010 5.8 Current 4.5

affordable in the HMA despite the affordable intheHMAdespite the LA marketarearemainsthemost a year earlier. TheSouth-Central during May 2018,unchanged from 1.0percent had avacancy rate of South-Central LAmarketarea,which theHMA was the tightest segmentof completions inthepastyear. The inventory includes1,025 apartment since theearly 2010s. Thatincreasein inventorythe apartment inDTLA an8,050-unitincrease in because of highest intheHMAsince2014partly percent ayear earlier, buthasbeenthe declined to7.6percent,down from9.9 The vacancy rateinthemarketarea up 3percentfromayear earlier. $2,668, area, withanaverage rentof Reis-defined Downtown market 2017. Rents were highestinthe 6 percentayear from2010through year earlier, andwas upanaverage of May 2018to$1,875,from$1,775a average rentrose6percentin and contributingtorisingrents. The vacancy ratetotrenddownwards since 2010,causingtheapartment completions outpaced apartment household growth hasgenerally 4.8 percentin2010(Reis, Inc.). Renter percent ayear agobutdown from units was 4.2percent,upfrom3.9 with20ormore rate forproperties May vacancy 2018,theapartment of housing in2016was apartments. As allrental An estimated69percentof to $3,500. 1 percentfromayear earlier, however, for four-bedroomhomesdeclined a three-bedroomhome. Average rents for aone-bedroomhometo$3,125 12 months, andranged from$2,400 with rentsduringtheprevious rose from2to7percent,compared three-bedroom single-family homes Average rentsforone-,two-, and vacancy rateremainedunchanged. four-bedroom homes, wherethe

Central Los Angeles,CA • COMPREHENSIVE HOUSING MARKET ANALYSIS 14 Rental Market Market TrendsHousing Continued multifamily averaged permitting in DTLA.From 2000through2005, development since2010occurring (Figure 9),withnearly allthe that prevailed duringthemid-2000s development higherlevelssurpassed of activitypermitting hasrecently Los Angeles division. Multifamily multifamily inthe unitspermitted, as measuredbythenumber of all multifamily buildingactivity, for approximately 29 percentof Since 2000,theHMAhasaccounted through 2024. becoming available from2020 with additionalstudenthousing is expected tooccurinthreephases, student housingdemand.Completion $700 millionUSCVillage tomeet the of plans toadd3,750bedsaspart students annually. Currently, USC during thenext 3years, orby1,400 to continue toincreaseatthisrate 3 percentsince2012andisexpected increased eachyear byanaverage of in theHMA.Studentenrollmenthas totalrenterhouseholds 5 percentof currently accountforanestimated growth. Studentrenterhouseholds studentenrollment of fallen short housing needs, althoughhousinghas student of that meetaportion nearly 16,000campus-owned beds comprising oriented apartments 51 residencehalls, suites, andstudent- the nation(2018,USC).USChas and California thestateof outside of the 45,500USCstudentscomefrom USC. Approximately 57percentof rentalmarketimpactis of in terms in theHMA,mostsignificant the11colleges anduniversities Of rent intheHMA. percent to$2,299,thesecondhighest earlier, whiletheaverage rentwas up5 percent, upfrom4.1percentayear area, thevacancy rateincreasedto4.6 the Hollywood-Silver Lakemarket $1,107 from$1,069ayear ago. In average rentincreasing4percentto

approximately 2,675unitswere concentrated inDTLA,where intheHMAare construction were recently completedorunder that Market-rate apartments Bureau; localplanningoffices). year (CBREGroupInc.; U.S. Census duringtheprevious units permitted in theHMAcomparedwith6,625 5,575 multifamily unitswere permitted ending May 2018,approximately are inlease-up. Duringthe12months several inDTLAthat new apartments but hasslowed recently becauseof since 2015comparedwiththe2000s remained atrelatively higherlevels Multifamily development has have tohomeownership. beenbarriers relatively strictlendingrequirements figure in2006becausehighpricesand development since2010,stillbelow the allmultifamily risen to16percentof condominiumshas of proportion intheDTLA.The construction multifamily development height of when 7,750unitswere the permitted, 1,625 unitsfrom2013through2015, rising eachyear byanaverage of a year from2010through2012before 2,550unitswereaverage permitted of hasincreasedsince2010.An permitted multifamily units the number of householdgrowth, along withgreater economic conditionsbegantoimprove multifamily development. As of this perioddeclinedto12percent condominium development during 650unitsby2009.Theshareof of to 2,950beforereachingadecadelow declined unitspermitted the number of followed bytheGreatRecession, and the saleshousingmarketcontracted, from 2000through2005.By2007, during 2006,upfromonly 15percent multifamily unitspermitted percent of Condominiums accountedfor37 increase inmultifamily construction. sales marketthatcontributedtoan strong 5,025 unitsin2006becauseof 2,475 unitsayear beforereaching Central Los Angeles,CA • COMPREHENSIVE HOUSING MARKET ANALYSIS 15 Estimated DemandforNewMarket-RateRentalHousingintheCentralLosAngelesHMADuring Table 5. Source: Estimates byanalyst currently under construction willlikelysatisfy someoftheestimateddemand. The forecast period isJune 1,2018,toJune2021. Notes: Numbers may notaddtototalsbecauseof rounding.Monthlyrentdoesnot includeutilitiesorconcessions. The6,025units Rental Market Market TrendsHousing Total 1,800 ormore 1,600 to1,799 Monthly Rent Zero Bedrooms ($) the ForecastPeriod Continued Demand Units of 3,000 2,400 600 Monthly Rent Total 2,200 ormore 2,000 to2,199 One Bedroom ($) Sources: U.S.CensusBureau,BuildingPermitsSurvey;estimatesbyanalyst Notes: Excludestownhomes.CurrentincludesdatathroughMay2018. market-rate unitsintheHMAaverage Overall, rentsfornewly completed underway have yet tobeannounced. in 2018.Rents attheseproperties units thatalsowillbeaddedlater apartments, allinDTLA,with469 arebeingconvertedproperties to 2018. Inaddition,fournonresidential with completionexpected laterin tower,525 unitsina43-story both and 888atGrandHopePark, with tower,with 498unitsina53-story include825SouthHill, construction respectively. Developments under at$2,475,$2,675,and$4,100, starting studio, one-,andtwo-bedroom units opened inlate2017,withrentsfor respectively. Atelier, with363units, at $1,850,$2,250,$3,275,and$4,100 two-, andthree-bedroomunitsstart early 2018.Rents forstudio, one-, the 159-unitTopaz thatopenedin completed developments include completed sinceJune 2017.Recently Figure 9. Multifamily UnitsPermittedintheCentralLosAngelesHMA, 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000

2000 2000 toCurrent Demand Units of 4,200 3,350 2001 840

2002

2003 Monthly Rent Total 3,200 ormore 3,000 to3,199 2004

Two Bedrooms 2005 ($)

2006

2007

2008 Demand Units of 3,600 2,875

number of bedrooms. number of housing intheHMAbyrentlevel and demand fornew market-raterental period. Table 5shows estimated theforecast during thesecondyear of rentalhousingdemand of portion the demandinfirstyear anda 528 unitsinplanningwillsatisfyall andthe unitsunderconstruction of underway inthedivision. The number allrentalunits 32 percentof intheHMArepresents construction The 6,025unitscurrently under forecast, fromincreasedmigration. the the secondandthirdyear of is expected toincreaseslightly in in theLosAngeles division. Demand demand accounting for40percentof rental unitsintheHMA(Table 1), estimated for12,000new market-rate During theforecastperiod,demandis units, respectively. studio, one-,two-, andthree-bedroom $1,600, $2,000,$3,000,and$4,000for 2009 720

2010

2011 Three orMore Bedrooms Monthly Rent Total 4,000 to4,199 4,200 ormore 2012

2013 ($)

2014

2015

2016 Demand Units of 1,200 2017 960 240

2018

Central Los Angeles,CA • COMPREHENSIVE HOUSING MARKET ANALYSIS 16 Data Profiles Table DP-1. Sources: U.S.CensusBureau;DepartmentofHousingandUrbanDevelopment;estimatesbyanalyst and the12monthsthroughMay2018.ThecurrentdateisJune1, Notes: Numbersmaynotaddtototalsbecauseofrounding.Employmentdatarepresentannualaveragesfor2000,2010, * Los Angeles-Long Beach-Glendale,CA MetropolitanDivision. Sources: U.S.CensusBureau;DepartmentofHousingandUrban Development;estimatesbyanalyst Notes: Numbersmaynotaddtototalsbecauseofrounding.The current dateisJune1,2018. Table DP-2.CentralLosAngelesHMADataProfile, 2000toCurrent Total population Total population Nonfarm payroll jobs Unemployment rate Total resident employment Total households Total households Owner households Owner households Renter households Percent owner Renter households Percent owner Total housingunits Percent renter Total housingunits Percent renter Owner vacancyrate Median familyincome Rental vacancyrate Rental vacancyrate Owner vacancyrate Los AngelesDivision 1,792,854 9,519,338 4,124,300 4,425,623 3,133,774 1,499,744 1,634,030 3,270,909 521,932 157,550 364,382 557,024 $51,300 47.9% 30.2% 52.1% 69.8% 2000 2000 3.3% 1.6% 4.3% 3.4% * DataProfile, 2000toCurrent 5.4 1,811,532 9,818,605 3,918,600 4,302,274 3,241,204 1,544,749 1,696,455 3,445,076 544,939 160,798 384,141 586,636 $62,100 47.7% 29.5% 52.3% 70.5% 2010 2010 5.8% 1.7% 5.8% 2.7% 12.5 10,323,000 1,932,000 4,463,000 4,908,000 3,384,000 1,539,000 1,845,000 3,555,000 579,600 162,700 416,900 617,900 $62,400 Current Current 45.5% 28.1% 54.5% 71.9% 3.7% 1.1% 4.5% 1.8% 4.5 2000 to2010 2000 to2010 Average AnnualChange(%) Average AnnualChange(%) -0.5 -0.3 0.1 0.3 0.3 0.4 0.3 0.2 0.4 0.5 0.5 0.5 1.9 2010 toCurrent 2010 toCurrent 1.8 1.8 0.8 0.6 0.5 0.8 0.0 0.1 1.0 1.0 0.4 0.6 0.1 Central Los Angeles,CA • COMPREHENSIVE HOUSING MARKET ANALYSIS 17 Data DefinitionsandSources commercial structures are not reflected inthe arenotreflected commercial structures Forpermit. example, someunitsclassifiedas building orareissuedadifferenttypeof permit orcreatedwithoutabuilding are constructed activity thatoccursinanHMA. Someunits necessarily allresidentialbuilding reflect Building Permits: donot Buildingpermits vacant bytheCensusBureau. specifiedas“other” workers; andthecategory recreational, oroccasionaluse;usedbymigrant or soldbutnotoccupied;heldforseasonal, thereforeincludesunitsrented for rent.Theterm all vacant unitsthatarenotavailable forsaleor Development (HUD),othervacant unitsinclude by theU.S. HousingandUrban of Department Other Vacant Units:Inthisanalysis conducted the development pipeline. orunitsin for unitscurrently underconstruction excess vacancies. Theestimatesdonotaccount theanalysis, growth, losses, and dateof the as-of the3-year forecastperiodgiven conditionson of needed toachieve abalancedmarketattheend thetotalhousingproduction the estimatesof buildingactivity.are notaforecastof Theyare Demand: Thedemandestimatesintheanalysis 28,2013. the OMBBulletindatedFebruary Management andBudget (OMB)in the Officeof isbasedon thedelineationsestablishedby report The metropolitandivision definitioninthis by theanalyst Forecast period:6/1/2018–6/1/2021—Estimates analyst date:6/1/2018—Estimatesbythe Current 2010: 4/1/2010—U.S. Decennial Census 2000: 4/1/2000—U.S. Decennial Census huduser.gov/portal/ushmc/chma_archive.html For onothermarketareas, additionalreports please goto conditions. onlocaleconomicandhousingmarket and information state andlocalgovernment officialswhoprovided data sourcesand expresses itsappreciationtothoseindustry may bemodifiedbysubsequentdevelopments. HUD and nationalsources. Assuch,findingsorconclusions datefromlocal availableon information ontheas-of aspossiblebased findings areasthoroughandcurrent Market Analysis Division within HUD. Theanalysis and guidelines andmethodsdeveloped bytheEconomicand The factualframework forthisanalysis follows the may beunderconsiderationbytheDepartment. insuranceproposalsthat anymortgage of acceptability regardingthe tomakedeterminations does notpurport local housingmarketconditionsandtrends. Theanalysis useful to builders, mortgagees, with andothers concerned findings,information, andconclusionsmay alsobe HUDinitsoperations. Thefactual and guidanceof This analysis fortheassistance hasbeen prepared [email protected] 213–534–2676 Los Angeles HUDFieldOffice Wendy Ip, LeadEconomist Contact Information CMARtables_CentralLosAngelesCA_18.pdf for thisHMA,goto For tothehousingmarket additionaldatapertaining multifamily buildingpermits. single-family and are includedinthediscussionsof activity. theseestimates additional construction Someof this through diligent fieldwork, makesanestimateof residential buildingpermits. Asaresult,theanalyst, huduser.gov/publications/pdf/ .

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