Rental Market Hard Hit by Housing Decline

Rents fell across Los Angeles County and much of Southern California in 2008, USC researchers said in a forecast released on Wednesday.

"In L.A. County alone, 41,000 people moved out of apartments last year compared to the 29,000 who moved in over the past five years," said Delores Conway, director of the Casden Real Estate Economics Forecast at USC's Lusk Center for Real Estate.
 
"The dramatic changes in the economy are taking their toll on landlords, who are lowering rents or giving concessions just to keep their units occupied," she said.
  
The average for one-bedroom apartments in Los Angeles was $1,397 last year, with the highest prices on the Westside, according to the forecast.

Countywide, prices receded an average of 3.8 percent last year.

Rents in Pasadena and Burbank are stable, while prices in Hollywood and downtown Los Angeles are under downward pressure from new condominiums that are being leased, rather than occupied by their owners, according to the report.
  
Occupancy figures are down, too, in part because of the large number of new units that came on the market in 2008.

Prices are expected to stabilize in 2010 as the broader economy recovers, but the downward pressure on rents is expected to continue through 2009, according to the study covering Los Angeles, Orange, Riverside, San Bernardino and San Diego counties.

Orange County rents dropped only 2 percent last year, but it was the first year of falling prices in 13 years, and rents could fall another 1 percent this year. The average for a one-bedroom unit at the end of last year was $1,310.

The biggest drops -- 4 percent, blamed mostly on unemployment and high inventory -- were in the Inland Empire, which saw occupancy rates hit a 10-year low, according to the report. One-bedroom apartments average $912 per month at the end of 2008.

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Prices in San Diego County, often seen as a Southern California real estate trendsetter, rose by 1 percent, and the occupancy rate was 95 percent, according to the Casden Forecast. One-bedroom apartments averaged $1,162 per month.
 

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