Sky-High: Rent Prices in Los Angeles
By: Nishaanth Krishnan (Project Lead), Tracy Charles, Anika Chakrabati, Hyuma Tio, and Lily Zhou
Summary
We did an analysis of rent prices in Los Angeles in order to find a cause of high prices, what causes certain areas to be more expensive than others, and which areas offer a relative bargain.
Introduction
Los Angeles, with its excellent climate and beautiful beaches, is well-known for its high prices. In this article, we explore what factors may influence these prices, which areas tend to have higher prices, and finally, which areas offer a better quality of life for a lower cost.
Data Analysis
In order to conduct our analysis, we put together data from the USC Price Center, an institute that looks into the societal problems that Los Angeles faces. This data covers neighborhoods in the city of Los Angeles as well as other cities in Los Angeles County. We then focused on the following variables:
- Population
- Commute Time
- Median household income
- College graduation rate
- Elementary math proficiency (as a proxy for school quality)
- Average household size
We also gathered data from the U.S. Census Bureau and the St. Louis FRED in order to gain data to look at the problem on a macro level
Section 1: Los Angeles’s Housing Situation
Why is Los Angeles so expensive? At first glance, one may attribute this to the city’s attractive nature. With numerous access to beaches and a mild year-round climate, Los Angeles presents an ideal environment to live in. However, there is another important factor driving up rent in the city: the lack of new housing.
Los Angeles has consistently been building less housing than many of its peer cities. This bar plot shows new housing units constructed in 2019. When compared to its peer cities, Los Angeles is only constructing around 23 units per 10 thousand people. Other cities, like Washington D.C., are constructing much more, with more than 40 units per 10,000 people constructed there. This shows that Los Angeles is constructing less new housing than other cities, thereby increasing rent prices by increasing demand for existing properties. This problem is by no means a new one.
This graph above shows that rent prices in Los Angeles have dramatically increased over time for both one-bedroom and two-bedroom apartments. In 1985, it was possible to get a 1-bedroom apartment for less than $600! Nowadays, it costs more than $1500 for such an apartment, more than double the amount 37 years ago. Such increases have made Los Angeles an increasingly unaffordable place, with many choosing to leave the area altogether.
The above graph shows the population in Los Angeles County in the past decade. Population growth has been stagnant, with the population declining since 2019. This highlights how many people are moving out of the Los Angeles area, which could be a result of high costs for housing.
Section 2: Rent Prices by Neighborhood and City
While Los Angeles is an expensive city, many parts of the area are more expensive than others.
The neighborhoods and cities in the area with the highest rent prices include Porter Ranch (median rent price of $3246), Topanga (median rent price of 3009), and Marina Del Rey (median rent price of $3008). These areas tend to be affluent areas near the mountains and the coast. On the other hand, Watts (median rent price of $951), West Compton (median rent price of $1000), and Pico-Union (median rent price of $1039) have the lowest rent prices in Los Angeles. These areas tend to be located in the central parts of the county.
Looking at the problem spatially, we see the general trends exhibited by the most and least expensive places.
The central parts of the county as well as outlying regions like Lancaster tend to have the lowest rent prices. On the other hand, areas along the coast and in the Santa Monica Mountains have the highest rent prices. The difference between the most and least expensive areas is staggering with some places having median rent prices of over $2400 while other places have median prices of around $1300.
Section 3: Desirable Places, Undesirable Places
As seen above, some places in Los Angeles are obviously more desirable than others. We decided to look at what variables in our dataset were the most correlated with rent price.
It looks like median household income, college graduation rate, and elementary school math proficiency are the variables most correlated with higher rent prices. On the other hand, the unemployment rate, average household size, and the percentage of the population who are Black are the variables that have a strong negative correlation with rent prices. These trends reflect many of the socio-economic divides in Los Angeles. Areas with good schools (and therefore high math test scores) tend to attract the well-educated and those with high incomes, who can afford to live in such areas like Porter Ranch and Marina Del Rey.
On the other hand, high unemployment rates in places with fewer economic opportunities lead to depressed rent prices. It is also important to note that the fact that the Black percentage of the population is a variable that is negatively correlated with rent price could be indicative of socio-economic injustices such as redlining. In regards to household size, one explanation could be that households with fewer people can allocate more of their income to rent than families because families would need to spend more money on other necessities such as food.
Looking at these trends visually, many more patterns emerge.
The above scatterplot maps out the correlation between each neighborhood’s college graduation rate and median household income. By the shape of the data, we can see that neighborhoods with a higher proportion of college graduates also tend to have a higher household income.
This is further related to renting prices because the areas with higher college graduation rates and household income also tend to have higher rent prices, on average. This can be seen by the size of the data points in the above visualization. Each point represents a neighborhood in Los Angeles, and points that are large in size have higher rent prices. It is interesting to also notice the wide range of rent prices by area. While different neighborhoods in Los Angeles may only be a short drive from each other, the rent prices can vary on average from less than $1200 to greater than $3200 per month.
The above visualization also examines how household size ties into the correlation between education, income, and rent price. Data points that are darker in color indicate more people per household, and lighter colors indicate a smaller average household size. We can observe that there is a tight cluster of dark points near the bottom. These points represent neighborhoods with 4 or 5 people per household, on average. We can see that these neighborhoods with more people per household typically have low rent prices, low college graduation rates, and low median household incomes. Most likely, these neighborhoods have a higher proportion of low-income housing options with people living in more crowded spaces.
This scatterplot reflects the diverse range of wealth and income within the city of Los Angeles.
Section 4: Which areas offer the most for a low price?
While it is clear that many areas of Los Angeles are more desirable than others for a myriad of reasons, what areas offer a relative bargain?
To figure this out, we computed an average rank using our variables in which things like air quality index, commute time, access to high-paying jobs, and higher elementary school math scores, as well as having a low rent price were considered.
These were our results:
Monterey Park, with a median rent price of $1, 383, offers the most value for what you are paying. It offers easy access to recreational amenities and jobs, all for a relatively low price. The Northeast Antelope Valley, with a median rent price of $1, 156, offers a relatively poor value for the rent price. Even though the rent price is low, the Northeast Antelope Valley suffers from high commute times thanks to its location, diminishing the relative value of living there.
Conclusion
The City of Angels has lured many for its amazing opportunities. However, as a result of rising rent prices, that may not be the case anymore. Within Los Angeles, certain neighborhoods with better amenities that are closer to the mountains and the coast tend to have higher rent prices, while those in poverty-stricken areas in the center have lower rent prices, illustrating how deep inequality is in the city.
