Wanted: Cheaper rentals

A recent report from a USC think tank just confirmed what many renters have known for a long time ? it’s a landlord’s market.

Apartment rents are expected to go up 6% in Orange County this year, according to a report from the university’s Lusk Center for Real Estate. For Newport Beach, which has the highest apartment rental rates in the county, renters can expect to pay $1,500 a month on average for a one-bedroom apartment.

The increase is linked to a lack of affordable housing and a stall in the construction of new apartments, said Delores Conway, director of Casden Forecast which issued the report.

“The recent run-up in home prices makes apartment living more desirable,” Conway said in a prepared statement. “And the tight supply of land coupled with more condo conversions means fewer available units. That translates into higher rents and occupancy rates for the next couple of years.”

Overall, about 97% of available units are occupied, the report found. Typically anything over 95% is considered full occupancy. Conway said most occupancy rates are driven by apartment completions and only 1,500 units were created in Orange County in 2005, as compared with 3,600 in 2004.

“The vacancy is really low and people have to search hard and wide to find an apartment they can afford,” she said.

Conway said apartment projects planned at the Irvine Business Center and the Anaheim Platinum Triangle will take some pressure off renters searching for homes in coastal Orange County, but Newport Beach will likely feel a crunch for some time to come.

Costa Mesa officials said an apartment development proposed for Anton Boulevard and Sakioka Drive could add an additional 890 units to the city. The project has not been approved. Soon, city officials will begin public hearings on it.

Ongoing efforts to convert apartments into condominiums as individual units are also driving up apartment rentals. The process increases the overall value of the units, but tends to deplete the rental market, Conway said.

Converting apartments into condominiums often requires strict regulatory approval and can be achieved with varying levels of ease. Huntington Beach has very strict regulations about converting apartments, making it nearly impossible to flip most units. Former Huntington Beach Mayor Pam Houchen recently pleaded guilty to fraudulently converting condominiums and faces a federal prison sentence.

Converting units in Costa Mesa is much easier, said city principal planner Kimberly Brandt.

“We didn’t have any for years, but in the last couple of years, we’re seeing more,” Brandt said. “Right now we’re getting about one a month.”