Apartment rents in Orange County rose 10% over the last year, the sharpest increase in more than a decade, as the number of renters far outpaced new construction, according to a study released today.
The strong demand pushed up the average rent by $96 per month to $1,086, the largest one-year increase since the survey was started in 1985, according to Research Network Ltd., a Rancho Santa Margarita research firm.
As a result, more renters will be forced to share apartments, turn to other counties where housing costs less or lower their expectations of where they're willing to live in Orange County, said the company's president, Pamela Wooldridge.
"There's still not enough apartments out there," said Wooldridge, who estimated that 1,900 new rentals were constructed last year, almost all of them luxury units in Aliso Viejo and Irvine. But builders are putting up only about half of the rentals and houses needed to accommodate growth, she said.
The vacancy rate dropped another one-half percentage point to 2% during the 12 months ended in May, a level so tight that landlords can fill units simply by word of mouth and can become more selective choosing renters, Wooldridge said.
Moreover, the number of landlords using incentives to attract tenants, such as lower security deposits or reduced rents, dropped to an all-time low of 13%, the survey found.
The typical rent varied widely among cities. The highest average cost was found in Newport Beach at $1,417, and the lowest was in La Habra at $771.
Overall, rents in apartment buildings with 50 units or fewer averaged $833 per month. Rents at the largest complexes, which typically come with more features, were $1,187 per month. Despite the surge in rents, the rates still are below 1985 levels when adjusted for inflation. But as demand continues to grow, rents should surpass the adjusted 1985 levels in coming months, Wooldridge said.
The report, called the Orange County Apartment Market Overview, provides the most detailed snapshot of the county's apartment market. The survey sampled more than 113,000 units in complexes containing 20 units or more, or roughly half of the county's apartment stock. It does not include senior or income-restricted housing.
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Rising Apartment Rates
Orange County's tight rental market has helped to drive up rents 10% over the last year, the biggest jump in more than 10 years. Housing experts say the higher rates are forcing renters to find roommates, move out of the county or settle for a less. Here's how rents have climbed:
Source: Research Network Ltd.