Forget about being priced out of owning a home, Conston, 55, feels priced out of the rental market, too. To find a two-bedroom apartment for herself and her college-age daughter, she's using an online database she had to pay to tap into. Her story is a common one in some California markets, said Delores Conway, director of the Casden Forecast at the University of Southern California's Lusk Center for Real Estate. Los Angeles County has a 2.8% vacancy rate, down from 3.2% a year ago, she said. The competition for rentals has allowed landlords to raise rents by 7% on average throughout the county. Rents in Hollywood went up 9%, she said. The rental market is the complement to the housing market, Conway said. So when homeownership looks less attractive, renting looks more attractive. And buying a home is certainly looking less pretty these days for those on the fence between buying and leasing. Soaring appreciation rates in some markets have caused home prices to become less affordable; rising mortgage interest rates aren't helping either. The current supply and demand conditions may also inspire new apartment buildings, Conway said. "There's a lot of interest by the big REITs," she said, adding that new investments may help beef up rental stock down the line.
June 26, 2006