Rents falling in Southern California
Apartment rents are falling across most of Southern California as unemployed tenants double up with friends or family and the affordability of foreclosed homes makes some renters into buyers, a new survey has found.
The average rent in Los Angeles County fell almost 4% in 2008 as apartment occupancy rates dropped and new units came online. The decline should continue this year as more renters lose their jobs, according to the annual USC Casden Forecast expected to be released by the university today.
“In L.A. County alone, 41,000 people moved out of apartments last year compared to the 29,000 people who moved in during the last five years,” said forecast director Delores Conway.
To keep their units occupied, some landlords are lowering rents or offering concessions for signing a lease, such as a month of free rent or a reduced deposit, she said.
Rents should level out in 2010 as the economy recovers, the report said. The average one-bedroom apartment in Los Angeles rented for $1,397 a month at the end of last year.
Some markets are doing better than others for landlords. The Westside remains the priciest, while Pasadena and Burbank are stable with little change in occupancy or rents. Rents in Hollywood and central neighborhoods such as downtown Los Angeles are being weakened by new condominiums that are being leased rather than occupied by owners.
The San Fernando Valley should continue to see lower occupancy rates and rents in the near term because of layoffs in the area. Long Beach and the San Gabriel Valley are also more affordable than other neighborhoods, Conway said.
Orange County is generally stronger than the rest of the region, the report said, though rents came down 2% last year and should slip a little more in 2009. High home prices in the area and tight credit should keep the pool of renters large, however. The average one-bedroom unit there rented for $1,310 at the end of last year.
The Inland Empire suffered more from the recession. Rents there already have declined significantly since their peak in 2006 and will slip a little more before stabilizing in 2010, the report said. Average rent for a one-bedroom at the end of last year was $912 per month.
San Diego County’s apartment market hasn’t faltered much, even though it has felt the sting of rising unemployment and reduced consumer spending. Although rents are softening in some neighborhoods, they are likely to remain stable this year and increase slightly next year, the report said. The average one-bedroom rented for $1,162 at the end of 2008.