"Stricter lending standards following the subprime mortgage meltdown are causing many potential homebuyers, who now face a larger down payment and higher monthly payments, to find renting more affordable," said Delores Conway, director of the University of Southern California. It is also harder to qualify for a mortgage because lending standards have been tightened. Conway expects occupancy rates to average 96 percent across the five-county region this year. When a market's occupancy rate is higher than 95 percent, it is at capacity, she added. Even though sales have fallen since the start of the 2005 fourth quarter, the median home price around the region has stayed flat, although it reached a record in L.A. County last month. "As economic activity expands across the region, steady job growth and high home prices bode well for landlords," Conway said. "Strong investor interest and favorable long-term interest rates should help sustain sales activity of apartment buildings in all markets even as more units are being built."
June 1, 2007