Rent may rise more in 2005

Andrew Edwards

A recently released study forecasted that apartment rental rates in

Orange County would continue to increase this year, though the cost

to own a home has far outpaced the cost to rent.

The USC Casden Real Estate Economics Forecast, released Tuesday,

predicted the average monthly rent for an Orange County two-bedroom

apartment would rise to $1,520 across the county.

At the end of 2004, the monthly rent for a two-bedroom apartment

in Newport Beach already exceeded that number, with renters shelling

out an average of $2,043 per month, according to the survey. Costa

Mesa apartments were included in the survey’s Huntington Beach

submarket, where the average rent at the end of last year was $1,398.

Last year, apartment rental rates per square foot in Orange County

rose by 5.6%, according to the survey. By contrast, median home and

condo prices in Costa Mesa jumped 31.9%. In Newport Beach, the

increase was 26.36%.

The director of the Casden Forecast, Delores Conway, said less

than 15% of Orange County families can afford to buy a mid-priced

home in the county.

“The affordability’s at an all-time low,” she said.

Driving forces supporting expected rent increases included the

desirability of living near the coast and a strong employment

climate.

“Job growth in Orange County has been 2%. That’s strong,” Conway

said.

According to numbers released Thursday by the federal Bureau of

Labor Statistics, only a few U.S. metropolitan areas -- none of which

are in Southern California -- had lower unemployment rates in

February than Orange County, which had a 4.1% jobless rate.

High employment combines with a low supply of new units to prop up

rents, Arnel Management Co. president Steve Mensinger said.

“What makes it strong is lack of ability for new product to come

into the market and high job growth,” he said.

Mensinger said the average monthly rent for an Arnel-managed

apartment in Costa Mesa already exceeds the figure cited in the

Casden study, quoting a figure of $1,695 for a two-bedroom unit.

Prospective renters should scour online vacancy listings to find

the best possible deal, said Anthony Yannatta, director of corporate

development for Westside Rentals.

“Use technology and Internet databases to gauge for yourself what

the market is,” Yannatta said.

According to numbers provided by Yannatta, the current average

monthly rate for a vacant two-bedroom apartment listed by Westside

Rentals in Costa Mesa was $1,449. In Newport Beach, that figure was

$2,015.

In the Casden study, Newport Beach apartments had the highest

vacancy rates of any of the 10 Orange County submarkets studied --

about 8% of Newport apartments were vacant.

The report attributed the vacancies to the city’s high rents,

though Conway said it was unlikely a market correction would push

rents lower.

“I don’t know about dropping, but at least level off,” she said.

* ANDREW EDWARDS covers business and the environment. He can be

reached at (714) 966-4624 or by e-mail at andrew.edwards@

latimes.com.