Apartments.com Search Activity and Concessions Data Predict Continued Near-Term Softness
By Ryan Patap
CoStar Analytics
June 22, 2023 | 10:35 AM
Search activity and concessions data point to modest apartment demand for greater Los Angeles continuing for at least the near term, according to data from the online listing platform and CoStar company Apartments.com.
Search activity is a leading indicator of near-term renter demand, as renters must first find an apartment before committing to a lease and ultimately moving in. The average activity on Apartments.com from the beginning of this year through the middle of June is down from the past two years, at 78% of the activity seen in the same period in 2022 and 73% of the activity seen in 2021. The seasonal increase in activity often seen in the spring months did not transpire.
Concessions data in recent months suggests landlords and property managers are getting more concerned about attracting renters to their properties. The percentage of properties with over 25 units that provided concessions in May and in the first half of June is at its highest levels since the first half of 2021.
Neither search activity nor concessions data suggests current market dynamics are likely to shift. Apartment vacancy in greater Los Angeles, at 4.6%, has risen from a most recent low of 3.8% in the first quarter of 2022. Weak leasing activity, driven by economic uncertainty and inflation concerns, has significantly affected performance. With net absorption, the difference between move-ins versus move-outs, of 3,100 units during the past 12 months, recent activity has been below historical trends, as annual absorption during the past decade averaged 8,100 units.
The outlook calls for vacancies to continue to rise throughout the year. Renter demand is forecast to remain weak, based on CoStar's baseline outlook that anticipated a slightly negative net absorption of units in the second half of 2023.