The Rental Market
Orange County ’s renters face rising rents, limited choices – and landlords who can be more financially demanding than lenders serving homebuyers.
Orange County tenants won’t see much relief from rising rents. The county’s rents are expected to rise 3.6 percent this year and 3.5% next year.
Anxious buyers and simultaneous shortage of smaller, less costly residences helped push up Orange County’s median home price to its third record in four months: $565,000 for March, Dataquick reported.
Los Angeles apartment rental prices could soar by the end of the year, according to a report by the USC Lusk Center for Real Estate. The study found the average rental rate for a two-bedroom apartment should rise to approximately $1,500 in Los Angeles County. In addition, a one-bedroom apartment is expected to cost $1,200 and a three-bedroom could reach $1,700. Even though low interest rates made many renters jump into homeownership, Los Angeles apartment landlords haven’t suffered, as occupancy levels have remained historically high. Rents have increased 15 percent from 2001 to 2004, as the Los Angeles region’s economy has continued to pick up steam and add new jobs.
The percentage of households in California able to afford a median-priced home stood at 19 percent in February, a 6 percentage-point decrease compared with the same period a year ago when the Index was at 25 percent, according to a report released by the California Association of Realtors (CAR).
The minimum household income needed to purchase a median-priced home at $471,620 in California in February was $109,380, based on an average effective mortgage interest rate of 5.71 percent and assuming a 20 percent down payment. The minimum household income needed to purchase a median-priced home was up from $91,050 in February 2004, when the median price of a home was $391,550 and the prevailing interest rate was 5.74 percent.
The national economy is improving and unemployment is very low. Orange County just reported a 2.7 percent unemployment rate, and jobs are distributed over many industries resulting in very little exposure to massive layoffs.
Buyers have definitely come back out of the woodwork and that has caused another shortage in the inventory. The number of new listings is still on a slow pace, so supply is less than demand. Some sellers are still overpriced for their condition, but overall, the market is still in the seller's favor.
Inventory statewide is up from January of 2004, however in Long Beach it is down. Property is staying on the market an average of 48 days compared to 27 days as of January 2004
For buyers who have been waiting "for the bubble to burst," it's not looking very hopeful. For the beginning of the year, it is starting to look a lot last last year, but with higher prices. County wide, our inventory levels have fallen back to less than 2 months supply, and well-priced properties are again selling within days of coming on the market.
Nationwide, investigations of title insurance have intensified as state regulators allege that some companies participated in kickback schemes with real estate brokerage companies and home builders, returning a portion of profits to these entities in exchange for volumes of business.
One of every five loans in today's market is sub-prime -- meaning these are loans to consumers whose credit is substandard.