The idea that tenants renting LA apartments are saving, planning, and timing things just right for a property purchase is wildly outdated. At one point, renting before owning was the norm, but we blew past that point long ago. A significant portion of the city has no feasible path toward homeownership in LA… and that demographic is growing. Sometimes, it’s circumstance. Sometimes, it’s a choice. Often, it’s a bit of both. But as an investor, it’s important to understand the “permanent” renter, why they’re growing in number, and ultimately what this means for the rental market in Los Angeles.
Accepting Life as a Renter
It’s pretty easy to identify the major driver in LA’s growing “permanent rental” class. Homeownership has been pushed out of a reasonable range for the majority of this population. Median home prices in Los Angeles hover at around $1 million. And while rent is high, mortgages for these homes often exceed the average rent for the area.
Factor in the roughly $150,000 to $200,000 of upfront costs required just to get in the door, and it’s not rocket science why so many renters are content to remain just that. LA County’s homeownership rate hovers at 48%, beneath the state’s 55% rate in 2025’s Q3. It’s a city in which many have simply accepted that renting is life. And some tenants even seem to prefer it.
Cost Isn’t Always a Factor
Investors may be tempted to think of these permanent renters as low-income, but that’s not necessarily the truth. Between 2011 and 2023, LA’s renting households making over $150,000 nearly doubled from 8% to 15%. As the numbers may indicate, this is the fastest-growing income group in the rental market. The numbers also give us a window into this evolving corner of the rental market. In other periods, these high-income renters may have been biding their time for the right opportunity. Now, they’re in no hurry to leave their LA apartments.
However, older adult renters don’t seem to be as likely to be in this situation by choice. Reports show that over 382,000 older adult-headed households were renting in Los Angeles County. That’s over 127,000 households more than in 2010. This statistic is likely to grow as the Baby Boomer generation continues to age.
Why Gen Z Doesn’t Want to Leave Its LA Apartments
Baby Boomers may be loading the stats on one end, but Gen Z is contributing as well. Five years ago, Gen Z accounted for around 700,000 of LA’s renters. Today, 4.4 million Gen Z renters call LA… well, not “home” exactly. According to Zillow, Gen Z comprised 25% of all of the U.S. renters and 47% of the country’s newest renters as of May 2025. And, again, that number is expected to grow.
But couldn’t that number actually reduce if Gen Z eventually sought out properties for purchase instead of relying on LA apartments and rental homes? That’s a pretty big “if”. Entrata, a property management company, conducted a survey that revealed three-quarters of those surveyed from Gen Z plan to continue renting into the distant future. For one, Gen Z tends to appreciate flexibility, even if homeownership is financially possible. Secondly, Gen Z doesn’t seem to mind a tiny apartment if it opens the doors to a chic neighborhood that fits their ideals for city living, as emphasized by social media.
How This Affects the Investors of LA Apartments
Of course, underneath it all, population growth, limited affordability, and people’s continued love of the city continue to drive demand for LA apartments. Yet within this pool of renters, several different stories compete. Some tenants want flexible leases, often young professionals who work remotely in fast-paced industries. Others, often families priced out of homeownership, may want to stay in place as long as possible.
With 2024’s 23% drop in housing permits around LA and constant hurdles to new construction, supply won’t meet demand anytime soon. As for investors? Whether the long-term demand for rental property is good news or bad news depends heavily on the portfolio. Investors who own LA apartments in high-demand areas will obviously enjoy these ongoing conditions the most. Either way, recognizing the growing, diversifying demographic of long-term renters is essential to navigating the future of LA’s commercial real estate landscape.
