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As home prices fall, rent costs are rising
Average locally up 3.2% in a year
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It's certainly not a home seller's market, but it's not a renter's market either.
Ventura County rents edged up in the fourth quarter, partly driven by the housing slump that will steer more people to apartments.
Prospective homebuyers who don't qualify for financing or are reluctant to buy in case the market slides further remain in rentals. And some homeowners who cannot meet payments on their subprime loans as interest rates reset higher are becoming renters.
"If someone's not buying, what's their other choice? They rent," said Bill Watkins, executive director of the UC Santa Barbara Economic Forecast Project.
Ventura County's average monthly rent rose 3.2 percent year-over-year to $1,553 in the fourth quarter, RealFacts, a Novato-based real estate research firm, reported Thursday.
"Rentals have definitely gotten higher," said Jesse Heller of Ventura.
The 25-year-old single father has had to make sacrifices. He recently moved out of his own place and is now renting a room. It was not his favorite option, but it was much more affordable and was the only choice that met his monthly price range of $650 to $750.
Given the growing demand to rent instead of purchase, Watkins was surprised that rents did not jump more. He said he expects rents to inch up throughout the year.
But that could change quickly if Bank of America relocates Calabasas-based Countrywide Financial Corp. out of the state, moving thousands of jobs from Ventura County. The Bank last week announced plans to acquire the nation's top mortgage lender for $4.1 billion in stock.
If that occurs, the housing demand would drop in Ventura County, particularly in the east county, Watkins said.
Even with the county's housing slump, there does not appear to be a huge surge of renters. The average occupancy rate in the fourth quarter was flat, dropping 0.4 percent from the previous year to 93.5 percent.
Ventura County remains one of the most expensive places to rent in the state. It ranked fifth, trailing San Jose, Los Angeles, Santa Cruz and San Francisco, according to RealFacts.
Ed Harp, owner/broker of Property Management Realty in Thousand Oaks, said he expects flat rental rates this year in the Conejo Valley because of increased inventory.
Since the housing market has softened, many homeowners are trying to rent their homes instead of selling, which is increasing market inventory and offsetting demand.
"Last year, we didn't have as many houses on the market for sale or for lease as we do in 2008," Harp said.
Detached houses accounted for the biggest rent jumps in the Conejo Valley last year, he added. Harp speculated that rates for these types of homes to remain static in 2008.
The average rent for Thousand Oaks was $1,667 last quarter, a 2.4 percent increase from the previous year, according to RealFacts. Oxnard's average rent rose 7.9 percent to $1,454, while Ventura's average rent rose 5.5 percent to $1,448.
Average rents rose in all 20 major Western metropolitan markets, RealFacts reported. In many cases, last year's rent increases exceeded the inflation rate. Apartment dwellers in the San Francisco Bay Area, Salt Lake City and Seattle were particularly hard hit as average rents rose from 8.6 percent to 10.8 percent in 2007, RealFacts said.
Rents in Portland and the Los Angeles area climbed by at least 5 percent.
The changes were less dramatic in most other Western markets, with rent increases ranging from 1.4 percent to 4.4 percent.
The West's least expensive apartment rental market remained Tucson, Ariz., where the monthly cost edged up 2.9 percent to $665.
If the economy continues to falter as it has in recent months, apartment rents will be more likely to drop.
The sluggish economy already appears to be slowing the pace of rent increases in places like California's Central Valley, where rents ended December largely unchanged from September.
That inland section of California has been among the nation's hardest hit by the mortgage meltdown as lenders seize hundreds of homes from delinquent borrowers.
— The Associated Press contributed to this report.
Posted by freethought on January 18, 2008 at 7:37 a.m. (Suggest removal)
This happened during the last decline as well, since more people are moving to renting in the area. It will stabilize, and rent prices will drop off some as property owners become more desparate to occupy their empty properties, just as before.
Posted by rebel123 on January 18, 2008 at 11:05 a.m. (Suggest removal)
It is disgusting that landlords gouge renters this way. It would be different if the wages in Ventura were higher but they are low compared to other areas.
Posted by MarkRoberts on January 18, 2008 at 1:09 p.m. (Suggest removal)
If the rental unit was purchased in the last 4-5 years they may be unable to make their mortgage, tax, and insurance payments. That total cost on a $400,000 loan may run around $2,800 per month.
Posted by star on January 20, 2008 at 5:04 p.m. (Suggest removal)
>>It is disgusting that landlords gouge renters this way. It would be different if the wages in Ventura were higher but they are low compared to other areas
Was it disgusting when landlords lost money from low occupancy rates as renters were enticed to buy homes with ARMS and 40-year mortgages? That's was happening for years.
Is it more or less disgusting than a landlord kicking out tenants so he can sell the house at inflated price? That was happening too.
Everybody seems to think as housing prices go up, so will rent, and that they'll fall together too. It rarely works that way. Anybody who wants to make money in the next year should buy distressed properties and rent them out.
Posted by daleeks on January 21, 2008 at 8:59 a.m. (Suggest removal)
"Anybody who wants to make money in the next year should buy distressed properties and rent them out."
This distress cycle is in it's second inning. There will be many more deals in 2009 than there are now. In 2005 my rental application was turned down even though I had $500K in savings from selling my house and easily qualified for a half million dollar mortgage. Millions of renters thought they were homeowners during the liquidity orgy that pushed housing prices to absurdly unsustainable levels. House rents will fall significantly this year as the supply of empty unsalable houses rises, but apartment rents will rise for some time as mortgage holders move back into apartments.
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