Job Losses Fail to Dent Rent Increases in Southern California
- Apr 10, 2008
By Anuradha Kher, Online News EditorLos Angeles–Apartment rents across Southern California will rise slowly this year, according to the Casden Real Estate Economics Forecast released recently by the University of Southern California Lusk Center for Real Estate. “The Southern California apartment market is poised to weather the housing downturn and credit crunch as long as job losses are not too severe,” says Delores Conway, Ph.D., director of the Casden forecast. The forecast predicts apartment occupancy rates will remain in the 96 to 97 percent range. Conway says apartments in Southern California will remain in demand. “Renting remains attractive at a time when mortgages are harder to obtain for high-priced homes. Although the national economy is skating close to a recession, the apartment market is supported by demand for trade, regional economic strength, and higher paying jobs in healthcare and professional services,” she says. Covering the counties of Los Angeles, Orange, Riverside and San Bernardino, the Casden Forecast analyzes apartment transactions, new building permits, leasing activity and employment data using information from MP/F YieldStar, Hanley Wood and other sources.Los Angeles County ForecastA median home price of $460,000 and tighter lending standards will continue to position apartments as a realistic housing alternative for many. Apartment occupancy levels should drop slightly this year. Renters have more choices with many newly built apartments and some condominium projects that have reverted to rentals. With more than one million apartments, Los Angeles County will see rental increases averaging 2.5 to 3 percent with somewhat higher increases on the Westside and in Hollywood, Pasadena, Burbank and Long Beach. Orange County ForecastDespite job losses in Orange County, apartment demand picked up in 2007 with rents moving up by 4 percent on average and 6 percent in South Orange County. The overall outlook for the apartment market in 2008 is somewhat cautious as the region adjusts to employment contractions in the financial services and real estate industries. Rents should go up this year an average of 2.5 to 3 percent, with somewhat higher increases in Buena Park and North Orange County where supply is limited. By contrast, the large supply of new apartments in Irvine should lead to stable occupancies and limited rent increases.Inland Empire ForecastThe increase in service jobs and the availability of new apartments in Riverside and San Bernardino counties translates into continued demand for apartments. With an average monthly rent of $1,104, the region remains affordable. This year, renters face a 2 to 2.5 percent increase due to the large number of new apartments recently built and competition from the shadow market of houses and condos for rent.