Developers are building apartments at a fast pace in Southern California, but they’re not creating new supply quickly enough to force down rents, a USC report said.
Rents will continue to rise for the next two years, according to the school’s 2013 USC Casden Multifamily Forecast, as the region’s rental housing market continues to absorb units faster than they are being completed.
The boom in apartment rentals is being fueled by deteriorating home affordability, the report said.
“Despite marked improvements in employment and the overall economy, the rapid increase in home prices and interest rates are pricing first-time home buyers out of the local market,” said Richard Green, director of the USC Lusk Center for Real Estate.
“As more and more of these households become renters instead of buyers, we will continue to see fewer vacancies and higher rents,” Green said.
Renters’ choices were fairly slim in the second quarter, with apartment vacancy at 3.6% or less across Southern California
Average monthly rents were: $1,435 in Los Angeles county, $1,572 in Orange County, $1,388 in San Diego county and $1,059 in the Inland Empire.
The highest average rent was $2,328 in Santa Monica, where thriving technology and entertainment businesses are creating new jobs.