Third-quarter reports shows rents are rising throughout the
nation.
And not just in the major job centers like San Jose, San Francisco, and
Denver — but also in smaller attractive metros like Boulder, Colo., Durham,
N.C., and Jacksonville Fla.Apartment owners are enjoying the economic recovery
— and their bid to cash in, raising rents, may be a plus for the ownership
segment of housing.
But what about California?
According to RealFacts, Orange County rents for all asset
classes averaged $1,628, which made it the fifth most expensive apartment
market in California following San Jose ($1,980), San Francisco ($1,858), Los
Angeles ($1,757), and Santa Cruz ($1,664). Rents rose annually by 10.5% in San
Jose, 9.5% in San Francisco, and 4.7% in Orange County.
Apartment rents becoming expensive is creating a significant gap
between the rents consumers are expecting and reality.
According to a recent survey by Apartments.com, people searching
for apartments have unrealistically low rent expectations, particularly in many
of the “hip” cities that young adults seem to like. In Brooklyn, for example,
consumer expectations are 50% below actual rents; in Los Angeles 36%; and in San
Francisco 35%.
Sounds like especially young adults might be experiencing
sticker shock. But what does it all mean?
It is a good economic sign that the apartment market is still
going strong. That may benefit the housing market in the years ahead.
The financial competitiveness of apartment living has been
sheltered until recently by low price-gain expectations for ownership housing.
But this has changed recently, which is increasing the attractiveness of owning
a home for many consumers.
Finally, especially young adults — those echo boomers in search
of an active urban lifestyle -– may be somewhat surprised by expensive and
rising rents as they enter the market. As they search for a place to live, they
are likely to develop more realistic rent expectations — and turn a more
favorable eye to homeownership.
Chart below compares third-quarter RealFacts data for major
California markets — and recent job growth:
|
Metros
|
Q3 asking rent
|
Annual rent growth
|
Q3 vacancy rate
|
Annual job growth 9/12
|
|
San Jose
|
$1,980
|
10.5%
|
4.7%
|
2.5%
|
|
San Francisco-Oakland
|
$1,858
|
9.5%
|
3.9%
|
3.1%
|
|
Los Angeles
|
$1,757
|
4.7%
|
4.8%
|
1.6%
|
|
Santa Cruz
|
$1,664
|
3.0%
|
4.0%
|
2.9%
|
|
Orange County
|
$1,628
|
4.7%
|
5.4%
|
1.7%
|
|
Ventura County
|
$1,456
|
3.7%
|
4.2%
|
0.5%
|
|
San Diego County
|
$1,456
|
3.8%
|
4.9%
|
2.1%
|
|
Inland Empire
|
$1,107
|
1.7%
|
6.3%
|
1.4%
|
|
Sacramento
|
$963
|
0.9%
|
5.9%
|
2.0%
|
|
Bakersfield
|
$913
|
7.4%
|
2.7%
|
1.6%
|
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