Christine Arce had been eyeing a loft in downtown Los Angeles for six months, but the $1,550 monthly listed rent was just out of reach.
The fashion sales representative called back recently on a whim and found the property managers were offering just enough to bring her in -- a $100 monthly reduction and the first month free. "I was totally surprised," said Arce, 32.
She may have been pleased, but for landlords her good fortune represents a grim new reality.
After rising for several years, rents in the Los Angeles area are declining because of the economic recession and depressed home prices, researchers, real estate agents and property managers say.
The lower local rents match a national trend, according to a report released Wednesday showing apartment rents fell in 54 out of 79 U.S. metropolitan areas in the fourth quarter of 2008. Softening rents add another obstacle to a housing market recovery, economists say, because tenants with low rent payments feel less urgency to buy a home.
Nationwide, apartment rents eased 0.1% in the fourth quarter, the first drop since 2002, according to the analysis by research firm Reis Inc.
Los Angeles apartment rents fell 0.7% in the fourth quarter, the first decline since 2001, although overall rents for the year were up slightly over 2007.
Property owners and real estate agents say the supply of rental units has climbed in the last year. Overbuilding during the real estate boom added vacant units to the rental pool, and some home sellers discouraged by the moribund real estate market are renting their houses or condominium units rather than trying to sell. Foreclosures add both supply and demand to the rental market, as foreclosed homes become rentals and former owners seek places to rent.
Declining incomes and rising unemployment also mean people have less to spend on rent.
Mark Verge, owner of the property listings service Westside Rentals, said he'd seen rents fall faster in the last three months than at any time since he founded the company 13 years ago.
"I used to have to beg owners to lower rents. Now they ask me, 'What do you think I should lower it to?' " Verge said.
Verge said his service had 24,000 units listed for rent -- a 33% increase from the 18,000 he had at this time last year.
Rents had been holding up in the early part of last year, Verge said, as property owners accustomed to annual rent hikes continued to ask for relatively high amounts. In recent months, however, owners have found they must lower rents or let their units lie vacant, Verge said.
