O.C. Rents Hit Record High, Average $1,026

Orange County rents, which broke through the $1,000 mark for the first time in the spring, continued their upward march this summer as the region’s economy created more jobs than it did apartments.

The county’s average monthly rent rose 7.3% from a year ago to a record $1,026, according to RealFacts, a Novato real estate research firm, in a survey released Friday.

The occupancy rate also hit a record, rising to 97.7%, from 97.0% a year ago, meaning that landlords found new tenants before actual openings occurred.

“You’re seeing everyone across the board raising rents,” said Brian Abernethy, research manager in the Newport Beach office of Marcus & Millichap Inc., a Bay Area real estate brokerage.

“People have one of two choices: either they live in the Inland Empire or else

they pay higher rents. It’s not the best outlook, but unfortunately it’s what’s happening.”

The rental survey, which covered a three-month period ended Sept. 30, put Orange County rents at 23% above the national average, which is $834, according to M/PF Research Inc., a Dallas-based apartment research firm.

In Los Angeles County, the average rent surged past the $1,000 mark for the first time in the third quarter, climbing 7.8%, to $1,012. It was the biggest increase in the five-county area.

In Orange County, RealFacts

surveyed 467 apartment complexes containing at least 82 units each for a total of 110,400 units. That’s about 30% of the total number of apartments in the county. The survey did not poll smaller complexes, but increases among higher-priced apartments tend to pull up rents in the rest of the market.

Newport Beach had the county’s highest average rent, at $1,656 a month. Anaheim had the lowest, at $831 a month. Anaheim Hills and La Palma had the highest occupancy rates, 98.9%; Seal Beach had the lowest, 94.4%

Rental housing historically has been the bridge that leads to homeownership, but as rents consume increasingly larger portions of consumers’ take-home pay, more people are finding it difficult to save enough money to buy a home.

Home prices, meanwhile, also have climbed to record levels, hitting a median $245,000 in September in Orange County. That has doused ownership dreams for many and given landlords like Marilyn Silverstein the leeway to raise rents without losing tenants.

Silverstein, who owns 63 units in six apartment buildings in central Orange County, said she recently raised the rents in one of her buildings by $30 to $510 per month. The units, mostly one- and two-bedroom apartments, tend to attract young, moderate-income couples. She said she has tried to implement the increases with compassion.

“We’re providing homes for blue-collar people, and their incomes haven’t gone up that much,” Silverstein said. “I know some of the larger complexes are swinging rent increases twice a year, but people don’t get pay increases like that.”

Silverstein has only one vacancy in her six buildings and 15 applicants, which she found simply by hanging a sign on the front of the building. While that unit’s rent will be raised to about $630 per month, she said she feared raising rents on current tenants. She doesn’t want to create overcrowded conditions in her units, where people might share space intended for one family.

“I have families that are good people, and there’s a mutual respect between us,” she said.

Rising rents are the result of soaring demand for housing. Los Angeles and Orange County ranked among the top five markets nationwide for housing demand. Construction in both markets isn’t keeping pace, according to one recent survey.

In Orange County, 2,713 apartment units were built during the first eight months of the year, a 17% gain over the same period last year. But the county’s economy created more than 25,000 jobs in the same period, according to some estimates.

Builders say that multifamily projects, which face vigorous opposition from homeowner groups fearing degraded property values, are difficult to develop. Vacant land on which such projects can be profitably built is increasingly harder to come by, especially in coastal areas near big employers.

Developers that have built attached housing on high-priced land charge rents beginning at more than $1,000 a month for a studio apartment.

“The fact that there’s hardly any construction and the land that is available is costly is making the housing market a lot tighter,” Abernethy said. “It’s going to continue to be that way for at least another two years.”

Even in smaller Orange County complexes, renters can expect to see annual rent increases in the 5% range, Abernethy said. As rents grow, apartments draw more investors, who renovate properties and increase rents.

In the rest of the Southland, rents in Ventura County rose 7.3% from a year ago to an average $954 a month; in Riverside County by 6.6% to $692 a month, and in San Bernardino County by 7.3% to $724 a month.

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Landlord’s Market

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% of Avg Avg. % chg market* sq. ft. rent yr. ago Studio 4.4 512 $726 +6.8 1 bed/1 ba. 38.5 749 $895 +6.8 2 bed/1ba. 11.4 925 $941 +7.8 2 bed/2 ba. 31.4 1,028 $1,176 +7.1 3 bed/2 ba. 3.3 1,212 $1,324 +9.3

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Most expensive: Newport Beach, $1,656

Lease expensive: Anaheim, $831

Toughest place to rent: La Palma, Anaheim Hills, 98.9% occupied

Easiest place to rent: Seal Beach: 94.4 occupied

* Does not include townhomes, which account for 11% of the market.

Source: RealFacts

Rents By City

Newport Beach had the highest average rents in Orange County in the third quarter, at $1,656 a month. Anaheim had the lowest, at $831 a month. Here’s a look at rents by city.

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City No. of Avg. Avg. units occupancy rent Aliso Viejo 3,677 97.0% $1,267 Anaheim 14,391 97.7 831 Anaheim Hills 742 98.9 1,175 Brea 2,003 97.8 934 Buena Park 1,958 97.1 837 Costa Mesa 7,633 98.0 1,071 Cypress 1,465 98.6 935 Dana Point 1,190 96.8 1,236 Foothill Ranch 1,344 96.9 1,198 Fountain Valley 2,288 97.5 1,003 Fullerton 7,174 98.3 864 Garden Grove 2,996 98.5 914 Huntington Beach 6,316 98.2 1,024 Irvine 11,669 96.8 1,346 La Habra 1,694 97.6 892 La Palma 800 98.9 900 Laguna Beach 421 97.1 1,127 Laguna Hills 1,601 96.0 1,056 Laguna Niguel 3,214 98.0 1,129 Lake Forest 2,747 97.8 1,039 Mission Viejo 2,314 98.0 975 Newport Beach 5,639 97.1 1,656 Orange 2,604 97.1 955 Placentia 1,380 98.7 997 Rancho Santa Margarita 2,408 98.1 1,103 San Clemente 810 97.1 1,072 San Juan Capistrano 274 97.0 1,199 Santa Ana 9,155 98.4 948 Seal Beach 549 94.4 1,306 Stanton 1,124 98.3 848 Trabuco Canyon 184 98.4 1,135 Tustin 29 97.5 1,005 Westminster 1,910 98.2 901 Yorba Linda 816 97.3 1,243 Total 110,405 97.7 1,026

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Note: Rent data is taken from a survey of 467 apartment complexes containing at least 82 units. The average complex in the survey contained 236 units.

Source: RealFacts