Thursday, June 7, 2012

Bakersfield home values drop slightly, supply still low

Bakersfield home values drop slightly, supply still low:
The median sale price of an existing single-family home in the Bakersfield area in May was $137,000, down 5.6 percent from April but up 1.4 percent from May 2011.
That's according to the Preliminary Crabtree Report, a monthly guage of the local housing market prepared by Gary Crabtree of Affiliated Appraisers.

Monday, June 4, 2012 | Printer-friendly article page | Printer-friendly article page

June 3, 2012

Inland Empire apartment renting gets pricier

Mike Perrault
The Desert Sun

Rents are rising throughout the Inland Empire.
Apartment dwellers in the region paid about $20 more monthly during the first quarter compared with a year ago and $50 more than two years ago, a new report shows.
The average apartment rent in Riverside and San Bernardino counties rose 1.8 percent year-over-year to $1,102, Novato-based research firm RealFacts reported.
The quarterly report shows rents vary widely by city, with the average rent at $745 in Indio, $822 in Palm Springs and $1,116 in Palm Desert.
The average rent throughout California — which had a 4.9 percent vacancy rate — was $1,470.
In cities such as San Luis Obispo, San Jose and San Francisco, where the economic recovery has been more robust, year-over-year rent increases are considerably higher.
The average asking rent in San Luis Obispo rose 26.2 percent, 12.5 percent in San Jose and 10.5 percent in San Francisco, RealFacts reported.
An apartment in the inland region costs about $520 a month less than in Los Angeles or Orange counties, and $300 less than in San Diego County, RealFacts reported.
Helene Villanueva shared $1,400 rent at an apartment in Tustin, but when she moved to the Coachella Valley, she was able to slash the rent to about $900 for a two-bedroom, two-bath apartment in Indio.
“It took some searching because some complexes didn't have what we were looking for,” Villanueva said.
Still, more renters in places such as the Coachella Valley, Hemet and the High Desert who work in Los Angeles and Orange counties or the western edge of the Inland Empire are moving to apartments closer to their jobs, said Alex Garcia, senior vice president of investments for Marcus & Millichap Real Estate Investment Services.
“With gas prices increasing so much, people do an analysis and see that their cost of gas has gone up $200 to get to work,” Garcia said. “They say, ‘I'd rather pay $200 more on an apartment, save wear and tear on my car, have less time in traffic and improve the quality of my life.”
Apartment demand has been high enough that owners have cut the average leasing incentive to about 19 days of free rent, he said.
Apartment operators in the inland region have seen a 4.4 percent average increase in revenue over the past year, Marcus & Millichap analysts said.
Apartment managers and commercial real estate analysts said two of the factors that are keeping rents strong are low vacancy rates and the fact that few new apartments are being built.
David Peters, manager of the 78-unit San Jacinto Racquet Club Apartments in Palm Springs, only recently had a vacancy after being at 100 percent occupancy for months.
“One of the residents bought a double-wide trailer in Cathedral City,” Peters said.
Marcus & Millichap analysts expect the average vacancy rate in the inland region to dip to 4.2 percent, the lowest level since the end of 2005.
Developers are on track to complete about 520 multi-family units in the two-county region this year, only about a 0.4 percent increase in existing stock, Garcia said.
About 118 of those units were wrapped up in the first quarter.
Last year, only 100 apartment units were built, marking a steep decline in apartment completions from typical pre-recession levels.
Marcus & Millichap analysts said about 6,300 apartment units are in the planning stages in the inland region, but those projects don't have specific start dates.
Location plays a role
The Riverside-San Bernardino-Ontario region ranked as the 13th most expensive out of 24 markets that RealFacts lists in California.
The San Jose-Sunnyvale-Santa Clara metro area ranked No. 1 with an average rent of $1,857, while Yuba City was 24th with a $759 average monthly rent.
A recent report by the National Low Income Housing Coalition noted that in California, the fair market rent for a two-bedroom apartment is $1,353. The report said a household must earn $4,511 monthly — or $54,127 annually — to afford this level of rent and utilities - without paying more than 30 percent of income on housing.
A minimum wage worker earning $8 and hour would have to work 130 hours per week to afford a two-bedroom apartment, the report stated.
Analysts said along with the Inland Empire's 6 percent vacancy rate, there are other reasons apartment occupancy is up and rents are increasing.
Chapman University economist Esmael Adibi said many people moved in with parents or relatives or doubled up with roommates as a result of the recession. More of them want to get their own place as the job market and economy slowly continue to improve.
Adibi said overall job growth remains anemic, but the economy continues to move in the right direction.
“It means if someone has a job, you probably will be able to keep your job, but if you're out of a job, you may have a difficult time.”
Many homeowners who were foreclosed on or sold their homes in short sales can't qualify for financing, so they must rent apartments, condos or houses.
At the same time, some retiring baby boomers are looking to downsize, and their children are entering the workforce and finding that renting an apartment better suits their incomes and lifestyle, commercial real estate professionals said.
With interest rates at an all-time low, rental rates rising, and housing prices in many cities more affordable than in years, more apartment dwellers may begin looking to buy, said Jim Franklin, associate broker with Prudential California Realty.
Marcus & Millichap analysts determined the average Class A, higher-end apartment rent is $289 more than the inland median priced home.
Peters at San Jacinto Racquet Club Apartments said there are other reasons renters may decide to buy.
“Some places now are starting to charge for water, sewage and trash, or are charging for pets,” Peters said.
Additional Facts