REAL ESTATE - Housing skid beginning to affect rents - Southland landlords see occupancy rates slip as more apartments and vacant houses come on the market.
When Riverside County landlord Eloise Figueroa learned that her tenant was about to move out of her four-bedroom home in Perris and into a lower-priced rental house, she sprang into action.
"I said, 'Where are you going? What are you paying? OK. That's your new rent,' " said Figueroa, who agreed to cut her renter's $3,000 monthly lease by $150 to keep him.
After years of substantial increases, landlords throughout Southern California are finding it's getting harder to increase rents at the same torrid rate. On average, rents are still rising, but more slowly than they have been.
No place is the phenomenon more pronounced than in the Inland Empire, where the slumping housing market is creating new competition in the form of vacant and unsold homes.
What's more, Riverside and San Bernardino counties have experienced a boom in new apartment construction that dumped nearly 5,000 units on the market in the last 12 months.
"There has been more new supply in the past year than in the past five years," said Delores Conway, a USC economist. "With this much supply, the demand has not been as strong."
The occupancy rate in the Inland Empire fell to 93% in the second quarter from 94.9% a year ago, according to data being released today by RealFacts, a Novato, Calif.-based research firm. Experts say occupancy of 95% or better is necessary for a building to be considered fully occupied.
And even though rents in the two-county region rose on average 4% to $1,153, it was the slowest annualized rate of growth in a year, according to RealFacts, which tracks rents at apartment complexes of 100 or more units in 15 Western states. Its data are considered a reasonable gauge of general rental market trends.
Landlords elsewhere in Southern California also experienced sliding occupancy rates and slower rent growth. In Los Angeles and Orange counties, the average monthly rent in the second quarter rose 6.4% to $1,607, compared with a year ago, but the pace of rent growth was the most sluggish in a year, and off the 7.5% in the fourth quarter of 2006. Meanwhile, the occupancy rate slipped 0.6 of a percentage point to 95.3%.
In Ventura County, where landlords had been enjoying nearly 9% year-over-year growth rates, the average rent rose 7.2% to $1,542, as the occupancy rate fell 2.7 percentage points to 93.8%.
"Southern California is definitely slowing, and the Inland Empire is slowing big time," said Chris Bates, a RealFacts analyst.
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