Rent Is Going Through the Roof
Apartment construction continues to plummet in Ventura County, driving a housing shortage that has cut vacancy rates to virtually nothing and hiked the cost of a typical rental by nearly half since 1997.
At both ends of the county, the cost of apartments is now so high that not only are the young and working poor forced to double up, but also some professionals are buying homes because mortgage payments are cheaper than rent.
Melissa Gross, 26, spends nearly two-thirds of her take-home pay as a Thousand Oaks second-grade teacher on the Moorpark condominium she bought in March. But her $1,460 monthly payment is still less than the rent she would pay for a similar dwelling.
“I have friends who rent houses who pay much more than me, and they’re always complaining about how it’s really hard to get that down payment,” said Gross, whose parents and grandparents chipped in to cover her initial $20,000 condo payment.
About one-third of Ventura County’s households, or 85,000, are renters, who often pay $1,500 to $2,500 a month.
Likewise, rents for a typical three-bedroom apartment jumped to $1,419 in July, according to the Ventura-based Dyer Sheehan Group. The average rent for an apartment of any size--from studio on up--was $1,135, up from $797 four years earlier.
Apartment rents are steep regardless of location, ranging from an average of $1,043 in Oxnard to $1,271 in Thousand Oaks. Ventura County’s rentals are slightly higher than the Southern California average of $1,118, reports Novato-based RealFacts. Of the coastal counties, San Diego is about $75 a month less, and Orange is about $75 more. Los Angeles is higher overall.
Rents will only increase in the future, analysts say.
That is because California’s population grew 14% in the 1990s, while housing increased just 9%. And most of those new dwellings are owner-occupied suburban homes. State builders shun apartment construction partly because rentals are no longer effective tax shelters.
Before changes in the federal tax code a decade ago, about half of all new dwellings in California were apartments. Now about 25% are. And in Ventura County’s hot growth-controlled real estate market, just 15% of all new dwellings built during the last 10 years were apartments.
“New apartments have a whole lot of trouble competing with existing stock,” said Ben Bartolotto of the Burbank-based Construction Industry Research Board. “It doesn’t pencil out unless it’s for luxury apartments.”
Construction Decline Continues
In California, apartments and other multifamily construction peaked in 1986 with 168,000 units, and is now running about 38,000 a year, Bartolotto said.
“It’s been low and it’s going to drop again,” he said. “It’s ratcheted down even more this year.”
Ventura County builders pulled building permits for only 287 multifamily units during the first 10 months of this year, 10% of the total for residential construction. That compares with 611 for the same period last year and 1,517 in 1989.
Besides the loss of tax breaks, other factors stifle apartment growth locally--the high cost of land, stiff city and school fees, an anti-apartment bias in city zoning and a not-in-my-backyard mentality by homeowners who dominate politically, analyst Dawn Dyer said.
“We have this illusion that we can control growth in Ventura County by just stopping production of housing, and it doesn’t work that way,” Dyer said. “Your population is going to continue to grow because jobs keep growing and people keep having children.”
Some local cities levy $25,000 per apartment in fees, nearly as much as for a single family home, Dyer said. That and prices of $450,000 to $500,000 for each acre zoned for high-density apartments make it nearly impossible for construction to make a profit, she said.
So rents soar as vacancies drop to the current 2% countywide, a level so low it equates to virtually no vacancies. That means renters must spend more of their income just for a roof over their heads, taking money out of their pockets for consumer purchases that fuel the broader economy, Dyer said.
A 5% vacancy rate is considered healthy, since landlords can still make a profit and renters can shop for the best deal, she said.
“It starts to look pretty absurd,” she said. “It takes 50 grand a year to rent a two-bedroom apartment.”
Using 30% of income for housing, the traditional standard recommended by the U.S. housing department, renters in Ventura County would need to make precisely $49,520 a year, or $25 an hour, to afford a two-bedroom apartment, she said.
“What’s really happening out there is that people en masse are paying 40%, and some are paying 50%,” she said. “So you end up paying such a high rate it’s much harder to ever save enough money to buy a house. That could [block] some of the best and brightest from ever wanting to be in Ventura County.”
Deputy Dist. Atty. Michael Lief, 38, considers himself lucky. He split the $1,100 monthly rent on a Ventura condo with another prosecutor when he first moved to Ventura in 1997, and then found a two-bedroom apartment near the county courthouse that costs him $925 a month.
“It’s a deal,” he said. “I just drove by and found it. The market’s so tight that I didn’t have much success looking in the paper. All the best apartments don’t need to advertise. They just hang out a sign.”
Lief, who owed $100,000 in tuition when he graduated from law school in 1995, said he would like to buy a house, but even a little midtown Ventura bungalow costs $300,000.
“It puts me in the wait-and-see column,” he said.
Even physicians, among the nation’s best-paid professionals, have abandoned moves to Ventura County once they discovered the steep price of housing.
“Housing is a real issue,” said Dr. John Keats, medical director of the Buenaventura Medical Group in Oxnard and Ventura. “It’s inevitably raised by physicians we try to recruit, particularly those from areas where housing costs are less.”
Housing Costs Jeopardize Hiring
A week ago, a Lompoc doctor asked for $20,000 to $30,000 more in annual salary to offset the cost of a house, Keats said. Two days later, a surgeon from Boston was cool to a lucrative job offer because homes cost so much.
“His ability to accept the offer depended on whether the starting salary would cover his perceived need for housing,” Keats said. “He is still looking at the housing market and saying, ‘Boy, Ventura County is high.’ ”
Jeff Martin, 31, a gynecologist from Hollywood, moved his wife and two young children to Ventura in July. He said he was surprised at the cost of rentals, but couldn’t afford a mortgage because he is paying off medical school debts.
So for a while, he will rent a house in the hills for $2,000 a month, a real find, he said. And he will save for the $450,000 he said it would cost to buy a home similar to his 2,000-square-foot rental.
“Our estimation is that within three years we’ll have the money for a down payment and be able to buy a house similar to the one we’re living in now,” Martin said.
The price of a typical Ventura County home was $287,000 in October, up $29,000 from a year before and still surging after a steep four-year climb.
That often leaves the young, the poor and the newly arrived in a brutal renters’ market. “We’ve basically reached the point where a freshman teacher, a rookie policeman or firefighter, and others starting a career here are finding it very difficult to find housing within a reasonable driving distance,” said Gary Wartik, economic development manager for the city of Thousand Oaks.
“You need a working couple or two friends living together to afford one home,” he added. “And that’s very discouraging.”
The effects will eventually be seen on the economy, he said, because the small companies that are Thousand Oaks’ business backbone rely on modestly paid workers who can’t afford to live where they work.
“They won’t be able to find those workers,” he said.
And the problem gets worse all the time, said Karl Lawson, a housing official in Oxnard, where household crowding ranked fourth-highest among the nation’s large cities, the 2000 census showed.
“I get calls all the time from people saying, ‘Is it legal for them to raise my rent $300 a month?’ ” Lawson said. “And my answer is, ‘Yes it is.’ ”
Hundreds of families are on Oxnard’s waiting list for subsidized housing. Thousands more are on such lists elsewhere in the county.
Yet hardly any new apartments or condos are being built, and those that are are luxury units.
That is partly the result of city policies, although few officials would admit shunning apartment construction.
“You’d be hard-pressed to find a city with a stated policy discouraging multifamily construction,” said Everett Millais, executive officer of the Local Agency Formation Commission, a planning group. “They won’t say directly that they don’t want apartments, so it all goes back to how cities allocate land. And there isn’t much land allocated for apartments.”
It’s not just that apartment dwellers often require more public services. Apartment complexes also often pay low property taxes, because property assessments increase to market levels only upon sale, Millais said.
“So apartments are a double whammy in terms of services and taxes,” he said.
Developer Dave White, who is building two of Oxnard’s largest residential developments, said rents have risen so high that it now makes sense to build apartments again.
“But it’s really hard to get the zoning,” he said. “And existing residents really don’t want high-density apartments next door.”
(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)
Ventura County Multifamily Construction*
Jan-Oct., building permits **
*--*
Multifamily* As % of Units Residential Permits 1988 1,113 25.7% 1989 1,517 33.4% 1990 1,246 49.8% 1991 1,115 55.0% 1992 530 34.9% 1993 159 14.1% 1994 529 27.7% 1995 178 9.9% 1996 223 10.6% 1997 186 9.8% 1998 371 13.5% 1999 333 9.6% 2000 611 18.9% 2001 287 9.7%
*--*
* Multifamily units are mostly apartments, but including duplexes, four-plexes and
some types of condominiums.
** Figures represent building permits issued for first 10 months of each year,
1988-2001.
Source: Construction Industry Research Board
Ventura County Apartment Rents
Average, all apartments *
*--*
January January January July Percent 1997 1999 2001 2001 increase Amount $797 $892 $1,098 $1,135 42.4%
*--*
Breakdown by City
*--*
July July Percent 1999 2001 increase Camarillo $916 $1,099 20% Moorpark $1,035 $1,218 18% Oxnard / Port Hueneme $809 $1,043 29% Simi Valley $1,006 $1,166 16% Thousand Oaks $1,069 $1,271 19% Ventura $931 $1,043 12% Countywide $948 $1,135 20%
*--*
* Surveyed apartments represent about 80% of county’s total.
Source: Dyer Sheehan Group
Multifamily Construction by City
(tabular data not included)
