Forecast: Flat O.C. rents next two years
OC Register
Posted by Jon Lansner
The Casden Real Estate Economics Forecast, from the folks at USC's business school, predict flat Orange County rents in the next two years -- with occupancy rates barely changing.
That's a bit of a contrast to industry and government reports showing rents slowing increasing in recent months as the local economy modestly improves.
Casden analysis:
* "Stabilized" employment picture from loss of 75,000 jobs in 2009 to gain of 6,500 jobs, in '10. Unemployment rate in December 2010 was 8.9 percent vs. 9.5 percent a year ago. "Because of robust employment growth in preceding years, overall unemployment is still lower in Orange County than in neighboring metro areas such as San Diego, Los Angeles or the Inland Empire, and lower than the nation overall."
* Demand for apartments increased in year ended Q4 2010 to net 5,830 units, up 39 percent over the prior four quarters. Two Orange County submarkets experienced negative net absorption for the year: Mission Viejo and Central County.
* Occupancy increased 1.2 percentage in 2010 to 94.9 percent. Occupancy outpaced the West region by 0.8 percentage points, and had the second-best showing in Southern California.
* Average rents increased by 0.8 percent in 2010 to $1,475 at year's end, while "same-store" rents remained unchanged. Orange County's annual rent performance was the fourth-weakest among the 64 metro areas tracked nationwide by MPF Research.
* New Orange County apartment openings will drop precipitously in 2011.
* Orange County home prices, "remain high relative to the rest of Southern California. Both the employment picture and relative lack of home affordability have helped support the multifamily market in 2010."