County rents continue to climb

Alicia Robinson

Apartment rents in Orange County are expected to continue rising over

the next two years, in part due to the area’s buoyant economy and a

lack of rental housing supply, experts said.

A study released today by the USC Lusk Center for Real Estate

predicted Orange County rents will grow at 6% this year and 9% next

year, with occupancy expected to approach 97% by the end of 2005.

The average monthly rent for bachelor to three-bedroom apartments

in 2003 was $1,260 in Orange County, compared with $900 in Riverside

and San Bernardino counties and $1,300 in Los Angeles, the study

found. The average rent in Orange County rose about 20% over the last

four years, according to the study.

“It means that things are going to be tough, basically,” said USC

associate professor Raphael Bostic, author of the study. “This is a

really tight market.”

This is the second year USC’s Lusk Center has done the study,

which is an annual project established by a donor’s gift to the

school, Bostic said.

“If you’re looking to rent you should expect to see your rents

rise regularly, and life in that regard will probably not get easier

for some time,” he said.

Local rental companies supported the study’s conclusions.

“It’s not as easy to find a place as it used to be,” said Patrick

Verge, a manager at Westside Rental in Costa Mesa.

Everyone wants to live near the water, but with rents continuing

to climb it’s getting harder and harder to afford, he said.

Because of high rental rates people are doing more research when

looking for a place to live, and they are more likely to share an

apartment to decrease their rent, Verge said.

The rental market has started to soften a little because people

who were renting higher-end apartments took advantage of low interest

rates and bought homes, sad Eric Reichert, president of Orange County

Property Management, which manages rental properties for owners.

Rents have risen for several years, which has made affording an

apartment a struggle for people in low- to middle-income brackets.

“Those are the ones that probably hurt the most because they can’t

qualify to purchase anything,” Reichert said.

Rents have continued to rise in Newport Beach because there are

plenty of jobs available and a dearth of employees qualified to fill

them, said Richard Luehrs, president of the Newport Beach Chamber of

Commerce.

“Orange County has a very diverse economy, so other places in the

country where they’re very dependent on a particular sector [of the

economy], we don’t have that,” Luehrs said.

The city of Newport Beach last week reported apartment vacancy

rates averaged between 6% and 11% during each quarter of 2003, based

on a survey of nearly a quarter of the city’s rental units.

Some new rental units are becoming available in Newport Beach,

where about 1,000 units are being added at the Bluffs on MacArthur

Boulevard

Rental housing is in shorter supply in Costa Mesa, where many

development proposals have lost steam when faced with opposition from

anti-development groups. The lack of supply has pushed rents higher

in the same way that housing sale costs have appreciated due to a

shortage of homes for sale, Costa Mesa Chamber of Commerce Executive

Director Ed Fawcett said.

“From my viewpoint the rentals are high simply because very vocal

people are trying to stop any development from occurring,” he said.

Orange Coast College has proposed a project that would add about

250 units on college property at Adams Avenue and Pinecreek Drive,

but otherwise few new rental units are in the works, Fawcett said.

Bostic said the number of jobs available in Orange County is

expected to increase in the next few years, but no significant

increase in the supply of rental housing is predicted.

Costa Mesa has traditionally offered more affordable housing than

Newport Beach. But if nothing is available here, people working here

have to live farther away, adding to traffic congestion, Fawcett

said.

“The demand is always increasing,” he said. “The demand is not

going to diminish, and if no more apartments are allowed or if no

more housing is allowed, certainly the rates are not going to go

down.”

* ALICIA ROBINSON covers business, politics and the environment.

She may be reached at (949) 764-4330 or by e-mail at

[email protected].