Rents on Apartments in West Rise in 2005

Apartment rents rose throughout most of the West last year in the latest sign that landlords were slowly regaining some pricing leverage, according to a report to be released today.

All but two of the 20 major markets in the West surveyed by real estate research firm RealFacts Inc. ended 2005 with higher apartment rents than the previous year.

The biggest increases were concentrated in Southern California and Southern Nevada, where the regional economies generally have been stronger than in other parts of the West.

Apartment rents in Riverside and San Bernardino counties climbed 7.3% during the year to an average of $1,086 a month.

Even though that was the West’s largest annual rent increase, a sign of weakness loomed in the Inland Empire. Average occupancy rates in the two-county region dropped to 91.6% last year from 95.3% in 2004, a downturn that could force local landlords to back off the steady rent increases that have been imposed for several years.

The market spanning Los Angeles and Orange counties demanded the West’s highest rents, at $1,459, a 6.6% increase from 2004.

The West’s next six most expensive apartment rents were also in California, RealFacts said. Outside the state, the Seattle market fetched the highest apartment rents, with an average monthly price of $904, a 3% increase from 2004.

Tucson offered the least expensive apartments, at an average of $616, down 1.4% from 2004. Colorado Springs, Colo., saw a similar decline, depressing the average rent to $709. Those were the only two markets in the West surveyed by RealFacts to show decreases.

Meanwhile, the San Francisco Bay Area’s apartment market began to rebound from four years of steep rent decreases triggered by a technology slump that prompted many renters to move away in search of new jobs. At the same time, many renters with secure jobs bought homes to take advantage of low interest rates.

The average apartment rent in the five-county San Francisco metropolitan market covered by RealFacts rose 3.7% to $1,359 at the end of 2005.

The apartment market was nearly as strong in the San Jose metro market, the heart of Silicon Valley, where the average rent climbed 3.5% to $1,330, RealFacts said.

The average occupancy rates in both of those Bay Area markets are now hovering near 95%, typically a threshold that foreshadows higher rents.