In the early days of the pandemic, California’s economy took a nosedive along with the rest of the country. However, California seemed to suffer from the downturn the most. About 3 million Californians were suddenly unemployed, and the economy declined faster than anywhere else.
But by March 2021, employment rates in Los Angeles recovered 64%, 5% higher than the rest of the state. Employment continues to track upward as we hit the third year of the pandemic.
How California Bounced Back
Compared to the rest of the United States, California, and Los Angeles haven’t had it so rough.
While economic problems are still affecting the state, the Los Angeles-Long Beach-Anaheim areas are recovering, just not as quickly as they once were. Since Los Angeles recovered almost immediately after the lockdowns were lifted, they’ve remained stagnant for the last while.
A study that looked at COVID-19’s economic impact by metro area, it was found that the Los Angeles-Long Beach-Anaheim areas had some of the lowest-performance marketers in the US. This shows that while California is bouncing back, they still need to improve in key areas.
Let’s examine how this study ranked the Los Angeles-Long Beach-Anaheim areas:
- Jobs: -3.0% (41st)
- Unemployment Rate: +1.4% (50th)
- Job Postings: +37.3% (20th)
- Work Trips: -26.6% (48th)
- Retail Vacancies: +0.4% (45th)
- Listing Price: +1.2% (45th)
- Multifamily Rent: +13.1% (38th)
Even still, it’s hard to deny the allure of a cityscape filled with palm trees and a glorious sunset. It’s a big reason why the Los Angeles rental market is still succeeding despite the recession.
Real Estate in California and Los Angeles
If you could point to one area that improved the most after the pandemic, it’s the Los Angeles real estate market. Let’s take a look at why LA may appeal to investors and homeowners.
Mass Store Opening Across Los Angeles
LA County has already reopened retail, restaurants, and malls in 2022, but there was a fear that more people would stick to online shopping. While many consumers are opting for online stores, there are plenty of businesses reopening shops in Los Angeles due to an uptick in foot traffic.
With that said, it’s never a bad idea to open up a shop online to cater to a wider demographic. If your main concerns are high rent, you’d be surprised at how affordable LA can be. Cities like Santiago, Hong Kong, Stockholm, and New York City command much higher price tags.
Rents are Back to Pre-Pandemic Levels
Speaking of high price tags, you’ll be pleased to hear that rents are back to pre-pandemic levels. Multifamily rent increased by 13.1% over the last year. Combined with an increase in job postings, there will be more families looking for long-term and short-term rentals in Los Angeles.
Landlords are also permitted to raise the rent to reflect the high inflation rate, which helps offset the costs of managing and maintaining their rentals. Investors more interested in corporate leases are also able to raise their rent, especially on the high streets and high-traffic areas.
Ignited Interest in the Housing Market
Los Angeles has an expensive housing market, and the popularity of remote work caused a lot of people to flee the city. After all, the best cities for remote work typically have the cheapest rent. But as employers push workers to return to the office, Los Angeles will attract employees.
While the listing price for California is lower than average, that gives investors a lot more money to work with. Once the market rebounds, they’ll be sitting on incredibly valuable properties. It’s the same for homeowners who may have had to pass up a house due to its high expense.
But what does this have to do with LA’s high streets? Since more people are returning to Los Angeles, there will be more opportunities to make money, expand your business, or invest.
Where Los Angeles Will Find Improvements
In 2021, LA County released a report on COVID-19s impact on the local economy. This report outlines how Los Angeles will improve the state’s growth, improving the overall economy.
Lack of Living Wage Jobs
While Los Angeles has a growing house and business market, that’s going to decrease unless the county tackles the wage crisis. According to the report, LA needs 738,672 living wage jobs to achieve a satisfactory standard of living. To do this, the county plans to focus on equity.
Since the pandemic has had a disproportionate impact on lower-income families, people of color, and women, there’s a low probability they’ll bounce back without help. That’s because these demographics were already discriminated against prior to the pandemic.
Lack of Small Business Protection
Los Angeles did their best to support small businesses, but many of them fell through the cracks. In an effort to increase LA high street traffic further, the report outlines a plan to prop up small businesses run by minorities, people of color, and women and help them recover.
The report plans to stabilize workforce housing and develop job training in areas that were incredibly vulnerable during the COVID-19 pandemic. This initiative will help rebuild LA.
Lack of Appropriate Childcare
The Child Tax Credit issued during the pandemic pulled a lot of children out of poverty, but without it, parents and children continue to suffer. Parents will spend as much money as they can on their children. Without aid, both the child and parents must go without wants and needs.
The LA report wants to expand childcare access by providing grants, vouchers, and new services (including transportation). This gives parents in traditionally disadvantaged places more options for work and to amass an income. It also gives them more free time and money.
Why The Los Angeles Report Matters
While it’s a great thing that rent is higher and interest in the housing and business market is increasing, that pushes a lot of people out of the market who could contribute to the economy. If we eliminate the barriers facing vulnerable demographics, the economy will continue to thrive.