FORECAST: Average monthly fees in the region could top $1,000 in two years, USC says. By LESLIE BERKMAN Inland renters who think the 6 percent average rent increase they saw last year was hard to stomach can brace for worse to come. A forecast released Monday by the University of Southern California says average monthly rents in the two-county region could reach $1,056 in two years, a jump of almost 18 percent. The upward momentum in rents is attributed to a strong economy, including population and job growth, and a shortage of new apartment units. Raphael Bostic, director of the Casden Real Estate Economics Forecast released by the USC Lusk Center for Real Estate, said rents are still more reasonable in San Bernardino and Riverside counties than in Los Angeles and Orange counties. But increasingly, he said, Inland renters struggle against a tide of reduced affordability, as rents rise faster than their incomes. Bostic said the average Inland rent rose from $849 in the fourth quarter of 2002 to $899 in the fourth quarter of 2003. And he expects an 8.1 percent increase this year followed by an 8.5 percent increase in 2005. Alternatives that some renters will face, Bostic said, range from spending more of their household income on rent to crowding into smaller apartments to moving to less costly rental units in more remote communities and commuting farther to work on the freeways. "I think harder times are coming for low-income working families," said John Mealey, executive director of the Coachella Valley Housing Coalition. He said currently people who work for minimum wages in agriculture or in the hotels of the desert resort area cannot afford market rents. "We see families living in illegal, unlicensed, unsafe mobile home parks that have sprouted up in the eastern valley," Mealey said. Beverly Earl, regional director for Catholic Charities in San Bernardino, said many of the families driven into poverty by high rents are invisible because they are living in motels or doing without adequate food or unable to pay for such staples as soap and toothpaste. "Housing is taking 75 percent to 80 percent of the incomes of the people we serve," she said. Rose Mayes, executive director of the Fair Housing Council of Riverside County, said she expects more people will be living on the streets when landlords ask current renters to move out in favor of those who can afford to pay more in monthly rent. Dina Delgado, 41, gets a housing voucher from the Department of Housing and Urban Development to help pay rent of just over $1,000 a month for a three-bedroom home and utilities in Glen Avon, where she lives with her four children. But Delgado, a single mother who recently lost her job as a florist, said it is becoming increasingly difficult to find landlords who will accept HUD vouchers. As rents increase, she said, she is fearful she may not be able to afford the asking prices. Celia Valerio, a 33-year-old music teacher, said although she is currently spending nearly $1,000 a month to rent an apartment in Redlands and is expecting a $50 or $70 rent increase, "it's still cheaper than the housing market. My husband and I would like to purchase a home, but the prices have tripled over the past few years." Valerio said some of her neighbors are considering moving to other cities where apartments are cheaper. She said an older couple was looking into moving to a retirement community in Banning or Beaumont. Valerio said she would be willing to put up with a moderate rent increase rather than seek a new apartment farther away because she teaches out of her apartment, and most of her students live nearby. "The one trend I see is that those types of (rent) increases can lead to more commuter renters," said Buck Panchal, principal with Market Insights, a real estate consulting firm specializing in rental property. Panchal said he has seen an increase in apartment construction in Victorville, where the average rent is about $800 a month for a two-bedroom unit, or about $400 less a month than in Ontario. Kevin Assef, senior vice president at Marcus & Millichap, an investment real estate brokerage with offices in Ontario, said he believes the USC rent forecast is a bit inflated for the Inland Empire. His company is predicting a 10 percent to 12 percent average rent increase in the region over the next 24 months, not 18 percent. The most encouraging sign for restraining rent growth, he said, is a pick-up in apartment construction. He said the demand for apartments is being fueled by 100,000 new residents moving into the Inland region this year and the addition of 15,000 jobs. Counterbalancing that, he said, about 5,000 new apartments are coming on line, including 3,200 apartments expected to be built in Moreno Valley over the next two years and 1,100 units already under construction in Temecula and Murrieta.
March 30, 2004