Apartment Rents Will Slide, Mainly in SoCal
GlobeSt.com
By Bob Howard
...As Tracey Seslen, co-author of this year's Casden Multifamily Market Forecast puts it, "The future health of the Southern California multifamily market continues to be shaped by jobs, housing prices, the shadow market of rental homes and condos, and new construction." Seslen says that, overall, Southern California will not enjoy sustained increases in rents until the greater economic health of the region improves.
On the other hand, rents in San Diego may increase slightly when jobs return¯and since housing is still too costly for renters to become buyers in San Diego, landlords should be able to achieve the increases. The reason that San Diego will outperform the other SoCal markets in rental and vacancy rates is a steady stream of defense contracts and strong growth in the biotech industry that buoy the region's economy, the study explains.
Seslen's co-author, Richard K. Green, notes that while housing prices have dropped precipitously due to the surging rate of foreclosures in the Inland Empire region of Riverside and San Bernardino counties, the low-cost homes are being snapped up by all-cash buyers, not renters, who often lack 20% down payments and the income needed to qualify for a mortgage. "Housing is more affordable across the region, but low consumer confidence is keeping many first-time buyers on the fence and move-up buyers that lost equity are staying put. That opens the door for an increase in rents," Green explains...