Area apartment rental rates keep dropping, and it seems the trend won't change any time soon.
The average cost of renting an apartment dropped almost 6 percent from second quarter 2008 to second quarter this year in San Bernardino County, according to data collected by RealFacts, a Navato-based apartment research company.
It's great news for consumers, but not so great for apartment owners and investors.
One expert says he wouldn't be surprised if rates drop at the same pace from second quarter 2009 to second quarter 2010.
"My gut feeling is that it's going to be similar," said Alex Garcia, senior vice president of investments at the Ontario office of the Marcus and Millichap real-estate firm.
The unemployment rate is the biggest indicator of whether apartment vacancy rates will climb versus stabilizing, Garcia said. "If we're losing jobs, we're losing renters," he said.
The San Bernardino-Ontario-Riverside area unemployment rate was 13.7 percent in June, according to the California Employment Development Department.
Apartment rents in Rancho Cucamonga, Redlands and Chino Hills experienced the biggest changes, dropping an average of 7.8 percent, RealFacts data show.
As the region's employment base grew by leaps and bounds, the average monthly rate for a one-bedroom apartment nearly doubled between 1996 and 2008 in the county, topping out at $1,031. That's dropped to $972.
Apartment builders in San Bernardino and Riverside counties put 11,500 units on the market between 2003 and 2008. Then locals started losing their jobs in droves because of the recession.
That's what Tuesday's report by Marcus & Millichap's real-estate research division points out. The recession has "driven more Class B and C (apartment) residents to double up in order to ease living expenses," says the report, which focuses on the San Bernardino-Ontario-Riverside area.
Another factor driving the vacancy rate up is the increasing affordability of houses due to the depressed housing market. Some employed renters have found they can finally afford to buy a home.
"The typical mortgage payment for a median-priced home, using traditional financing, was $250 per month less than the average Class A asking rent during the second quarter (of 2009)," the report says.
It also says the average apartment vacancy rate in the region will jump to 9.1 percent - more than double the rate in mid-2004 rate of 4 percent. The rate in mid-2008 was 8 percent.
matthew.wrye@inlandnewspapers.com, (909) 483-9391
FAIR USE NOTICE. This document may contain copyrighted material the use of which may not have been specifically authorized by the copyright owner. Tenants Together is making this article available on our website in an effort to advance the understanding of tenant rights issues in California. We believe that this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the U.S. Copyright Law. If you wish to use this copyrighted material for purposes of your own that go beyond 'fair use,' you must obtain permission from the copyright owner.