You dont have to read several media sources to notice that there are two growing trends affecting the leasing and rental market. More and more renters are searching for their next apartment online as opposed to traditional methods and rental prices are rising as consumers choose to rent rather than buy in order to wait for home sale prices to improve in affordability-- as is clearly evident in California where the median sales price of a home is at $560, 690. Across the nation, the median sales price of a home is at $248,000.
According to Apartments.com, the company reported nearly 45 million visits in 2006, an increase of 20 percent over 2005. The top searched markets on the site with the highest growth over 2005 were :
1. Chicago (214%)
2. Los Angeles (203%)
3. Phoenix (182%)
4. Ft. Lauderdale (168%)
5. Atlanta (163%)
6. Detroit (158%)
7. New York (157%)
8. Tampa (156%)
9. Orlando (153%)
10. San Jose / Silicon Valley (144%)
Note that Los Angeles and San Jose, which are cities located in California, show a booming increase in online searchers looking for affordable rental housing.
Unfortunately for many renters, as reported in a 2/4/07 online article in USA Today, landlords are expected to raise apartment rents for a third-straight year in 2007. By no means are we attempting to take pot-shots at landlords, the objective is to give the perspective of how national rental rates compare to those in California.
With the projected rise of 5% this year, rents would be 14% higher than at the end of 2004, the report says. From 2000 to 2004, most landlords couldn't raise rents because so many tenants were leaving to buy houses or condos. To feed that buying frenzy, about 300,000 apartments were converted to condos for sale in the past three years. Now, even with 92,000 new rental units this year, the stock is still too little to meet rising demand.
Rents are rising because the payment gap between renting and owning remains wide. Even with this year's increase, the national median rent will be $943 a month, only 60% of the median mortgage payment of $1,566. In California, the median rent is at approximately $1,400 per month which is 47% of the median mortgage payment of $2,520.
And data from a Census Bureau report in 2000, showed that the highest rental markets were in Irvine, Sunnyvale, Santa Clara or Fremont, all California cities, where median gross rents all topped $1,200 a month. That was six years ago.
California cities claimed nine out-of-ten spots on the Census 2000's list of highest rents among large U.S. cities. The only non- California city in the top high-rent tier was Stamford, Connecticut, at $1,007 a month.
Ten Highest Rent Cities
Irvine, Calif. - $1,272
Sunnyvale, Calif. - $1,270
Santa Clara, Calif. - $1,238
Fremont, Calif. - $1,196
Thousand Oaks, Calif. - $1,131
San Jose, Calif. - $1,123
Daly City, Calif. - $1,074
Simi Valley, Calif. - $1,058
Stamford, Conn. - $1,007
Huntington Beach, Calif. - $ 985
Keep in mind that Southern California is a sprawling geographic area dotted with several hundred communities, it would be ridiculous to claim that there are no affordable rental areas; however, as a renter you can realistically expect to pay higher rents in more desirable neighborhoods or communities located by the coast. In order to get a good perspective on rental prices and desirable areas to live in, conduct a few online searches and check out sites such as Realtor.com, Apartments,com and Rent.com.
If living in the Golden State is your dream, there are now more online rental websites available with virtual tours, mapping tools and other information, so you can shop for a California rental from your desktop.
Nef Cortez has been a licensed real estate broker and has held various positions in the real estate and mortgage industry for over 25 years. If you would like to read more of Nef's pithy and timely advice (with the latest info on local foreclosures), visit his website at Chino Hills CA homes or read his blog at A Slice of So Cal Real Estate