Apartment rents falling in Southern California

The USC Casden Forecast's recent report is saying something I've known personally for over a year: rents are falling. A friend of mine is having to drop the rent on her town home by $200 to even get interested parties, and out in the desert areas of Palm Springs and environs, you can now rent a 4-bedroom home with a pool and spa on a 10,000-square-foot lot for just $1,500 per month! Yet not all areas are performing equally -- in neighborhoods of Burband and Pasadena, rents and vacancies reportedly are stable (although I continue to see multiple 'for lease' signs throughout the San Fernando and San Gabriel valley areas). From an L.A. Times story:

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...

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.

Click here for entire story.