Average rent in Inland Empire above $1,500 for first time, study says


Average rent in Inland Empire above $1,500 for first time, study says


Construction is underway on an apartment complex at Walnut Street and Hudson Avenue in Pasadena. Southern California’s increasing rental rates are fueled largely by a lack of available homes and apartments.
Construction is underway on an apartment complex at Walnut Street and Hudson Avenue in Pasadena. Southern California’s increasing rental rates are fueled largely by a lack of available homes and apartments.
Southern California apartment rents continue to rise, according to a report released Monday.

A forecast from research and analysis firm Axiometrics shows average monthly apartment rents in Los Angeles County, the Inland Empire, Orange County and Ventura County rose in February. And the Inland Empire’s average rental price topped $1,500 for the first time.

Average monthly rentals in the Inland Empire rose 6.7 percent in February to $1,501 compared with $1,407 a year earlier. The region’s occupancy rate held steady at 95.7 percent, although it was up from 95.4 percent in February 2016.

Los Angeles County’s average rent — which takes into account all apartment units ranging from studio apartments to penthouse units — was $2,271 in February, up 2.5 percent from a year earlier. That was down from the 6.3 percent annual growth that was seen in February 2016, but it shows apartment prices continue to rise. L.A. County’s occupancy rate for apartments was 96.3 percent in February, up from 96 percent in January and even with the year-ago rate.

Orange County saw a 3.2 percent year-over-year rise in rental prices, bringing the average monthly rent in February to $2,059 compared with $1,995 a year earlier. The county’s occupancy rate ticked up to 96.1 percent from 96 percent in January and 95.8 percent a year earlier.

A shortage of housing

Robert Kleinhenz , executive director of research at the Center for Economic Forecasting and Development at UC Riverside, said the Inland Empire’s rising rents were not unexpected.

“The Inland Empire has seen consistent growth in economic activity and employment in recent years, and with that growth have been population gains that are outpacing neighboring counties in Southern California and putting pressure on both the Inland Empire’s rental market and the market for owner-occupied homes,” Kleinhenz said. “There is a genuine need for more housing across much of California, and nowhere is the severity of the situation more apparent than in the Inland Empire.”

Tommy Thompson, senior vice president of the California Apartment Association, acknowledged that apartment owners and others who have invested in apartments are profiting from rising rental prices. But California’s chronic housing shortage, he said, is outweighing those gains. Construction of new homes and apartments has fallen way behind.

“The biggest hurdle is local government,” he said. “It’s a tug and pull between elected council members and the communities they serve. Increased traffic, noise and rising crime are things commonly cited by neighborhood groups. Different laws need to be worked out. We need the ability to get projects approved quicker, and local government can help do that.”

More rental increases predicted for 2017

Axiometrics predicts that L.A. County rents will rise 3.5 percent this year. The Inland Empire’s average rent is expected to increase by 4.6 percent and Orange County should see a 3.8 percent hike.

Alexis Logsdon, 32, and her husband and young son confronted high prices when they moved into in a two-bedroom, two-bath apartment in Pasadena about three years ago. But they came in with an advantage.

“We had just sold our home in New Orleans, so we used some of that money to pay a whole year’s rent up front,” Logsdon said. “We did that for the second year too, so the management worked with us to reduce our rent. Right now I know the apartments here are renting for $2,100 a month.”

Others who don’t have that kind of cash flow aren’t so lucky. Axiometrics reports that the average price for an apartment in Pasadena is $2,515.

ApartmentList.com reported last year that Pasadena had the biggest year-over-year rent increase in the Los Angeles metro area — a bump of 8 percent between July 2015 and July 2016. The median monthly rent — the point at which half of the rents are higher and half are lower — for a two-bedroom apartment in Pasadena went for $2,640 at that time.

Kleinhenz said Southern California is saddled with both a housing affordability crisis and a shortage of available homes.

“Homeownership fell to its lowest level in decades because of the recession,” he said. “That sent more people looking for apartments, but it’s difficult to get communities to accept multi-family projects. It’s a real challenge because not only have homes become unaffordable for many, but rents are higher. At some point something’s got to give.”

Apartment construction has been further slowed by groups that utilize the California Environmental Quality Act (CEQA) to block new development. That requires state and local agencies to identify significant environmental impacts that projects would create. Developers are required to avoid or mitigate those impacts whenever possible.

“Groups are using CEQA to disrupt the whole process of moving forward with real estate development,” Kleinhenz said.

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