On a recent bright afternoon in Redondo Beach, rent signs baked in the sun outside half the small stucco apartment buildings along the stretch of Beryl Street between Flagler and Harkness lanes.
"I've never seen it this saturated with rentals," said property manager Vickie Callahan, who owns a three-unit and a four-unit building in the area. "It's very scary."
It's a scene playing out across the Southland. As the struggling economy and high unemployment take their toll, vacancies are rising, rents are falling and property owners are increasingly willing to negotiate lease details.
"It's definitely a renter's market," said Delores Conway, director of the Casden Real Estate Economics Forecast at the USC Lusk Center for Real Estate.
The last time vacancy rates were this high in Los Angeles County was in the early 1990s, when they hit 5%.
The rate climbed to 5.3% in the first quarter from 3.8% in the first quarter of 2008, said Victor Calanog, director of research for Reis Inc., a real estate research company in New York that tracks 90% of buildings countywide with 15 or more units -- more than 750,000 apartments. In contrast, vacancies had been hovering between 2% and 3% for the last decade.
"Households are choosing to double up, triple up," Calanog said, and the consolidation has left rentals standing empty.
Not only are adult children moving back to live with parents, but "we're seeing the reverse, parents living with adult children," USC's Conway said. "To bring in income, they'll rent out the mother's house."
Changes in renter behavior were the subject of a Rent.com white paper released in late June. Users of the website are increasingly using the search term "roommates" and looking for two-bedroom units instead of one to share the expenses, Rent.com President Peggy Abkemeier said. The listing service also found that users are spending more time searching online for apartments and are more interested in basic amenities than luxuries.
The first quarter saw the largest rent decline in a decade for Los Angeles County, Reis' Calanog said. Effective rents, those that take concessions into account, fell 1.7% in the first quarter of this year from the fourth quarter of 2008, while asking rents dropped 1%.
Although rental houses aren't tracked the way apartment buildings are, area landlords are resetting rents in response to the leaner market.
