The USC Casden Real Estate Economics Forecast, released Tuesday, predicted the average monthly rent for an Orange County two-bedroom apartment would rise to $1,520 across the county. At the end of 2004, the monthly rent for a two-bedroom apartment in Newport Beach already exceeded that number, with renters shelling out an average of $2,043 per month, according to the survey. Costa Mesa apartments were included in the survey's Huntington Beach submarket, where the average rent at the end of last year was $1,398. Last year, apartment rental rates per square foot in Orange County rose by 5.6%, according to the survey. By contrast, median home and condo prices in Costa Mesa jumped 31.9%. In Newport Beach, the increase was 26.36%. The director of the Casden Forecast, Delores Conway, said less than 15% of Orange County families can afford to buy a mid-priced home in the county. "The affordability's at an all-time low," she said. Driving forces supporting expected rent increases included the desirability of living near the coast and a strong employment climate. "Job growth in Orange County has been 2%. That's strong," Conway said. According to numbers released Thursday by the federal Bureau of Labor Statistics, only a few U.S. metropolitan areas -- none of which are in Southern California -- had lower unemployment rates in February than Orange County, which had a 4.1% jobless rate. High employment combines with a low supply of new units to prop up rents, Arnel Management Co. president Steve Mensinger said. "What makes it strong is lack of ability for new product to come into the market and high job growth," he said. Mensinger said the average monthly rent for an Arnel-managed apartment in Costa Mesa already exceeds the figure cited in the Casden study, quoting a figure of $1,695 for a two-bedroom unit. Prospective renters should scour online vacancy listings to find the best possible deal, said Anthony Yannatta, director of corporate development for Westside Rentals. "Use technology and Internet databases to gauge for yourself what the market is," Yannatta said. According to numbers provided by Yannatta, the current average monthly rate for a vacant two-bedroom apartment listed by Westside Rentals in Costa Mesa was $1,449. In Newport Beach, that figure was $2,015. In the Casden study, Newport Beach apartments had the highest vacancy rates of any of the 10 Orange County submarkets studied -- about 8% of Newport apartments were vacant. The report attributed the vacancies to the city's high rents, though Conway said it was unlikely a market correction would push rents lower. "I don't know about dropping, but at least level off," she said.
April 9, 2005