Rents ticked up across Southern California in the fourth quarter of 2016 as limited vacancies kept demand high, according to property data firm Reis Inc.
In all, 2016 marked the sixth straight year of steady rent hikes in the region, reports by Reis and others show. Apartment rents are up 15 to 25 percent since 2011.
Orange County tenants paid the 10th highest apartment rent among key U.S. metro areas in the final quarter of 2016, with landlords asking an average of $1,799 a month for a vacant unit, property data firm Reis Inc. reported.
The monthly rent increased $44 from a year earlier, an increase of 2.5 percent.
Los Angeles County tenants paid the 11th-highest rent among the 82 major U.S. metro areas covered by Reis. The average asking rent there was $1,775 a month, up $85 a month or 5 percent year over year.
In the Inland Empire counties of Riverside and San Bernardino, asking rents were $1,262 a month in the fourth quarter of 2016, an increase of $59 a month or 4.9 percent from a year earlier, Reis figures show. The average rent paid there ranked 24th highest among the 82 U.S. metros Reis tracks.
Nationwide, average apartment rents increased $47 to $1,304 a month, a 3.7 percent year-over-year rent hike.
Rent hikes throughout Southern California have been sustained by low vacancies. Vacancy rates in the region have held steadily at 4 percent or less for the past five years.
The Inland Empire’s vacancy rate was 2.4 percent in the fourth quarter of 2016, Reis reported. Vacancies stood at 3.3 percent in Los Angeles County last quarter and in 3.2 percent in Orange County.
By comparison, the U.S. vacancy rate was 4.1 percent.
Vacancies remained low despite new apartment construction, noted Reis Chief Economist Victor Calanog. In some cases, landlords are offering rent concessions – such as a move-in allowance, a free-month’s rent or reduced deposits – to keep vacancy rates low. Still, “effective” rents, or the amount collected after concessions, increased in 67 of the 82 markets Reis tracks.
“The most expensive superstar markets like New York, San Francisco and San Jose are the ones registering declines in effective rents,” Calanog wrote.
In Southern California, however, effective rents are rising almost as fast as asking rents. The average effective rent in Orange County, for example, was $1,762 a month, up 2.3 percent. In Los Angeles County, effective rents averaged $1,652 a month, up 3.9 percent, while in the Inland Empire effective rents averaged $1,227 a month, up 5 percent.
New York, San Francisco and Silicon Valley had the highest asking rents among metro areas tracked, according to Reis. The cheapest rents were in Tulsa, Okla., Oklahoma City, Okla., and Wichita, Kan., where average rents were a fifth the amount paid in New York City.
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