February 27, 2025 The Newspaper Serving LGBT Los Angeles

USC Forecast Predicts Rising Rents and Commercial Real Estate Financing Struggles

Report Sparks Concerns for Real Estate Development in Southern California

By Dolores Quintana 

The University of Southern California’s Lusk Center for Real Estate predicts an upward trajectory in multifamily rents across Southern California over the next two years, signaling potential hurdles for commercial real estate financing.

The 2023 USC Casden Real Estate Economics Forecast analyzes market conditions and provides two-year projections for multifamily rents and vacancies. This year’s forecast also examines the impact of high-interest rates, migration patterns, and financing on the future of housing in Southern California.

Moussa Diop, associate professor of real estate at the USC Sol Price School of Public Policy and author of the forecast, anticipates moderate rent growth in the near term. However, concerns arise about the impending wave of maturing debt in commercial real estate, with challenges in refinancing loans at nearly double the original interest rates.

“Adding housing supply is crucial to alleviate rent burden, but it becomes near impossible if builders face difficulties in financing projects or have properties nearing default,” Diop explained. “This situation may lead to a lose-lose scenario for both renters and landlords.”

Diop’s forecast talks about the number of people who are leaving the state and California’s affordable housing shortage in the region as indicators of a “region missing the mark for livability.” 510,000 residents of the state left between 2020 and 2022, signaling a larger exodus than the population of Atlanta. New housing development has been undercut by high interest rates while operating expenses have impeded owners’ capacity to invest in developing more housing. 

“As the industry takes time to sort out financing, new supply will dip lower and lower. By the time momentum returns in a couple of years, more damage will be done. The vacancy will drop, and rents will climb. This is how we lose even more residents to nearby states. Renters in Southern California can’t afford a dip in production.” Diop adds “Renters will bear the brunt of this situation, with effects becoming apparent over time.”

In Los Angeles County, which has an acute housing shortage and has lost the most residents in the state, the net loss of 146,500 residents between 2020 and 2022 is equivalent to the size of the city of Fullerton, California. High mortgage rates have led to a 13% drop in multifamily permits in 2023. USC’s report projects slower average rent growth of 2% per year over the next 24 months, reaching $2,306 per month by October 2025, with a slightly decreased vacancy rate of 4.5%.

While Measure ULA funds efforts to increase affordable housing and combat homelessness, the USC forecast suggests that an additional transfer tax on properties above $5 million may have negative effects on Los Angeles. Buyers and developers would likely add costs to tenants via increases in rent, or developers could choose to not build in Los Angeles which could increase the gap in new housing.

Related Posts

West Hollywood Man Fatally Struck by Union Pacific Train in Boyle Heights Identified

February 26, 2025

February 26, 2025

Authorities Confirmed That 36-Year-Old Died at the Scene in a Train Collision A pedestrian who was fatally struck by a...

Academy Award Nominated Actress Cynthia Erivo to Receive GLAAD’s Stephen F. Kolzak Award

February 26, 2025

February 26, 2025

The Wicked star will be honored at the 36th Annual GLAAD Media Awards The LGBTQ media advocacy organization announced that...

LA County Supervisors Pass New Eviction Protections for Fire-Impacted Renters

February 25, 2025

February 25, 2025

Measure Prevents Most Evictions for Those Who Lost Income Due to Fires The Los Angeles County Board of Supervisors on...

Measles Exposure Reported at LAX, Public Health Urges Travelers to Check Immunization Status

February 25, 2025

February 25, 2025

Traveler With Measles Passed Through Lax’s Tom Bradley Terminal on February 19 The Los Angeles County Department of Public Health...

(Video) LA 5K Returns This March

February 25, 2025

February 25, 2025

Register Now At Mccourtfoundation.org Register Now At https://t.co/cR5oHHCctJ pic.twitter.com/DkiZbCrlxF — Palisades News (@PalisadesNewsLA) February 26, 2025

Arrest Made in Malibu July 4th DUI Crash That Killed Rideshare Driver

February 25, 2025

February 25, 2025

Influencer Faces Serious Charges in Tragic Death After Exclusive Party  Authorities have arrested a suspect in connection with a fatal...

Hundreds Protest Trump and Musk in West Hollywood, More Demonstrations Planned

February 24, 2025

February 24, 2025

Activists Rally Against Trump Policies and Musk’s Government Takeover Hundreds of demonstrators took to the streets of West Hollywood on...

‘Engaged California’ to Let Residents Shape Policy in the State, Discuss Solutions Publicly

February 24, 2025

February 24, 2025

Gov. Gavin Newsom Introduces a First-Of-Its-Kind Digital Platform to Amplify Our Voices Gov. Gavin Newsom announced the launch of Engaged...

Disaster Assistance Deadlines Loom for Palisades Fire Victims, Time Running Out

February 24, 2025

February 24, 2025

Relief Funds, FEMA Aid, and Low-Cost Loans Are Still Available Residents and business owners affected by the Palisades Fires have...

LAPD Seeks Help Identifying Teen Bicyclists Who Attacked Man in Broad Daylight

February 24, 2025

February 24, 2025

A Group of up to 30 Bicyclists Assaulted a Man After an Argument Detectives with the Los Angeles Police Department’s...

(Video) Spring by the Sea Awaits

February 24, 2025

February 24, 2025

Embrace the beauty of the season at Regent Santa Monica Beach, where golden shores and blooming horizons set the stage...

(Video) See The View From The Top of Santa Monica’s Pacific Wheel

February 24, 2025

February 24, 2025

For Tickets and More Information, Go To Pacpark.com For Tickets and More Information, Go To https://t.co/EeP5ZuEnF3 pic.twitter.com/UnhSXZoxId — Palisades News...

Former LAFD Chief Kristin Crowley Breaks Silence After Firing, Calls It an ‘Honor’ to Serve

February 24, 2025

February 24, 2025

Backlash Grows Over First LGBTQ Fire Chief’s Firing as Officials Demand Answers Former Los Angeles Fire Department Chief Kristin Crowley...

Britney Spears Former Beverly Hills Estate Hits Market After Stunning Renovation

February 24, 2025

February 24, 2025

Former Home in the Summit Offers Luxury, Privacy, and Breathtaking Design A newly renovated estate in The Summit, a 24-hour...

Governor Newsom Requests $40 Billion in Federal Aid to Begin Recovery From Southern California Fires

February 23, 2025

February 23, 2025

California Seeks Disaster Funding to Rebuild Communities Devastated by Disaster Gov. Gavin Newsom has requested $40 billion in federal disaster...