According to a report recently released by Axiometrics, a research, and analysis firm, average monthly rents in the Inland Empire, and LA, Orange and Ventura Counties increased in February. In the Inland Empire, average monthly housing rents topped the $1,500 mark for the first time. Rates here hit $1501 in February in comparison to only $1407 at the same time last year. The good news for landlords is that the local occupancy rate is holding steady at 95.7 percent just slightly higher than the same time last year when it was at 95.4 percent.
In LA County the average rent, this takes into account all forms of apartments ranging from studio to penthouse, now sits at $2,271, which is up a full 2.5 percent from the same time a year ago. While this is less than the 6.7 percent increase seen from February 2015 to February 2016, the figures still show a continued trend of increased rents.
Over in Orange County, the numbers are equally dismaying for the rental community as rents here have increased by 3.2 percent. By the numbers rents here averaged $1,995 last year but now stand at $2,059. These numbers are expected to continue increasing over the coming years as the housing shortage continues to be a major issue.
Continued Shortage of Housing in the Region
According to Robert Kleinhenz, the executive director of research at the Center for Economic Forecasting and Development at UC Riverside, these increases in rents were to be expected. “The Inland Empire has seen consistent growth in economic activity and employment in recent years, and with that growth have been population gains that are outpacing neighboring counties in Southern California and putting pressure on both the Inland Empire’s rental market and the market for owner-occupied homes,” Kleinhenz said.
While those who own, or have invested in apartment buildings are certainly profiting from the continued rise in area rents, the seemingly never-ending shortage of housing is rapidly outweighing any gains in the rental market. One of the biggest problems is that construction of new single and multi-family housing units is rapidly falling behind.
Tommy Thompson, senior V.P. of the California Apartment Association had this to say, “The biggest hurdle is the government. It’s a tug and pull between elected council members and the communities they serve. Increased traffic, noise, and rising crime are things commonly cited by neighborhood groups. Different laws need to be worked out. We need the ability to get projects approved quicker, and local government can help do that.”
More Increases on the Way
In its report, Axiometrics estimates that rents in LA County are likely to rise by as much as 3.5 percent by the end of 2017, the Inland Empire rents are expected to go up by 4.6 percent, and in Orange County by as much as 3.8 percent. According to a report issued last year by Apartments.com, Pasadena recorded the highest year-over-year increase in the entire metro L.A. area with an increase of 8 percent from July 2015 to July 2016. At this time, the median rent in Pasadena for a two-bedroom apartment hit $2,640. Unless changes are made in the way the government issues building permits, this problem is not expected to get any better in the foreseeable future.