Are Rents Rising in Orange County and Irvine?
“The problem with sales volume is that most homeowners just don’t want to sell. And why would they? Most sellers believe prices will only get better over the next two years.”—Glenn Kelman, CEO Redfin.com
“Foreclosed houses—which once made up almost half of all Orange County homes sales—made up just a tenth of such sales last month.
“And even fewer foreclosures are likely in the coming years…
“The result is a greater portion of pricier homes selling at the height end, coupled with hefty price hikes at the low- and mid-ranges of the market.”— Jeff Collins and Jonathan Lansner
”First-time homebuyers are being squeezed out of the market by falling inventory and the rapid influx of investors looking to buy basic homes to rent out to the growing population of people who are recently been foreclosed upon.”—Stan Humphries, Zillow chief economist
All the reasons listed above are leading to a lack of home buying options in Orange County, at least for those who want to buy a home to live in instead of as an investment. And this lack of options explains, at least partially, why rents are climbing in Orange County. Laura Khouri, president of Western National Property Management, states that improved employment and a drop in construction of multifamily buildings are additional factors.
Limited homebuying options, decreased construction of multifamily buildings, and increased employment numbers are all factors that would push rents up; however, many of those who are working are not making as much money as they did in the recent past. So how are potential Orange County renters able to afford increasing rents? Khouri provides some insight. She states that many “families have also had to add other family members to their overall composition.” She also states that there is “an increased rise in one-bedroom units being rented again by young single professionals.”
What is the rent situation in Irvine? According to Khouri, this “landlord’s market” is not a universal situation in Orange County. “With the addition of 2,883 new units in Irvine spread over eight projects in 2012, there certainly could be some fluctuation in the overall rental rates and occupancy rates in the fourth quarter of 2012 in the Irvine sub-market.”
Note: In October, Real Facts reported that among the top 26 California metro areas, Orange County had the fifth-highest average rents. In addition, Orange County and Los Angeles County shared ninth place when it came to rent increases. The average rent for a one-bedroom in the Orange County was $1,403; a one-bedroom/one bath was $1,486; a two-bedroom/two bath was $1,870.