Apartment Rents Hit New Highs; Vacancies at 1.5%

Fueled by a continued housing scarcity and increased demand, the average apartment rent soared to its highest level in history last month, edging close to the $1,000-a-month mark.

Mirroring the area’s skyrocketing home prices, the average apartment rent has jumped 7.4% over the past year to $938 a month, irrespective of size, according to a report released Thursday by RealFacts, a Novato-based research firm.

And analysts noted that despite the record rental price, vacancy rates fell by more than a percentage point to the dangerously low level of 1.5%. A 3% to 4% vacancy rate is considered healthy.

The anomalous trend worries some analysts, who said increasing housing costs and diminishing stock could help cool the county’s fevered economy.

High costs, they said, make it more difficult to lure companies to the area and retain those that are expanding.

“Nothing has gotten better; the market just keeps getting tighter,” said Dawn Dyer, president of the Dyer-Sheehan Group, a Thousand Oaks real estate brokerage. “If people are shut out of the market, they’re going to be living in the Valley and commuting, which means more traffic and they’ll be taking their dollars back home and spending them there, so it has the real potential to drain the economy.”

In addition, Dyer said rising rents may price out people who are critical in maintaining the area’s high standard of living. Typical renters, she said, are people like teachers, police officers and firefighters who have helped make the area so desirable.

In many respects, housing, affordability and lifestyle were factors that have helped put the county in the kind of bind it is in today.

With its proximity to Los Angeles, bucolic landscape, low crime, excellent schools and business-friendly environment, Ventura County has earned a solid reputation as one of the more desirable areas to live and do business.

Over the past decade, the area’s economy has boomed with broad-based diversification, which has helped create more jobs than at any other time in history.

More jobs were created in the county over the past two years than in the previous 10 combined. Last year alone, area payrolls grew by 2.5% with the addition of more than 8,400 jobs.

At the same time, housing construction has lagged far behind, creating an enormous demand that analysts believe would take years of steady building to satisfy.

“It’s under-built everywhere in the state and that’s the real reason we’re seeing a housing market like this,” said Caroline Latham, a partner at RealFacts. “There is so much room now for building that it would be quite a long time until we saw some balance [in the market].”

There are 13,287 apartment units in the county, RealFacts said.

The tightest markets in the county are in Simi Valley, Thousand Oaks, Newbury Park and Camarillo, all of which have rents at or above the county average.

In Simi Valley, there were virtually no apartments available last month, with the vacancy rate totaling a scant 0.9%. Meanwhile, average rents in that city have risen to $981 a month.

In Thousand Oaks, the vacancy rate stands at about 1.4%, with the average rent climbing to $1,047--up $20 from January.

The most expensive apartment market exists in Newbury Park, where the average rent stands at $1,072 a month. Vacancies there are also extremely tight, hovering in June at just 0.7%.

In Camarillo, the average rent has increased continuously since the early part of the decade to $981. Vacancies there stand at just 1.6%.

Elsewhere, Moorpark reported a 4.6% vacancy rate and an average rent of $1,003. Oxnard reported a vacancy rate of 1.3% and an average rent of $835.

Port Hueneme had a vacancy rate of 1.2% and an average rent of $813, and Ventura reported a vacancy rate of 1.7% and an average rent of $854.

The bulk of the area’s apartment stock was developed more than a decade ago. Construction in the 1980s accounts for 36% of the county’s total apartment pool. The majority of the rest, 43%, was built in the 1970s.

Just 8% of the area’s apartment units were built this decade.

And with developable land at a premium and the prevalence of strict growth-control measures, few expect many more apartment projects to be built. Most of those that are, they said, will be luxury units renting for upward of $1,000 a month.

“There isn’t any real indication that the situation is going to change much,” Dyer said. “If anything, it just keeps getting tighter.”

* RENTAL SURGE: Rents charged in Los Angeles and Orange counties reach record levels. A1