Housing slump fuels higher rents across West

SAN FRANCISCO — Apartment dwellers throughout the western United States are facing the biggest rent increases in years as more people vie to lease units amid a strong job market and feeble home-buying market, according to a survey to be released today.

As of June, the average apartment rent had climbed by at least 5 percent during the past year in nine of the 20 major western markets tracked by RealFacts Inc., a Novato-based research firm.

The increases were well above the United States' core inflation rate of 2.3 percent, as measured by the federal government.

The biggest price shocks occurred in the Silicon Valley hub of Santa Clara County, where apartment rents climbed 11 percent to an average of $1,569 per month, and Seattle, another high-tech haven where rents rose 9.9 percent to an average of $1,035, RealFacts said.

Other apartment markets with significant rent increases included: Portland, up 7.2 percent to $820; California's Ventura County, up 7.2 percent to $1,542; San Francisco and four neighboring counties, up 7.1 percent to $1,499; Los Angeles and Orange counties, up 6.8 percent to $1,607; Salt Lake City, up 6.8 percent to $741; San Diego County, up 5.5 percent to $1,345; and California's Fresno County, up 5.4 percent to $799.

The metro market defined by Los Angeles and Orange counties demanded the highest apartment rents in the markets studied by RealFacts. The least expensive rents were in the Tucson, Ariz., market at an average of $658.

Colorado Springs, Colo. was the only major market where apartment rents declined during the past year. Apartment rents there dipped 1.1 percent to $701 in June.

The high-tech industry's comeback from the dot-com bust of 2000 and 2001 is spawning more jobs, creating more demand for places to live in Silicon Valley, Seattle and San Francisco. Payrolls also are expanding in many other sectors.

As they find jobs, many people appear to be leasing apartments instead of trying to buy homes with housing sales sagging badly in most parts of the West. In the San Francisco Bay area, for instance, home sales fell to a 12-year low during June, according to DataQuick Information Systems, another real estate research firm.

Sales have been bogging down during the past two years as home prices have declined, causing more prospective buyers to stay on the sidelines in hopes of getting a better deal. The slowdown also reflects greater difficulty in getting mortgages as interest rates rise and lenders tighten their qualifying standards.

All those factors have helped fuel the West's hottest apartment rental since 2001 or 2000, RealFacts spokesman Chris Bates said.

Despite the recent escalation, apartment rents in Silicon Valley still remain well below the highs reached during the dot-com boom. In early 2001, Santa Clara County's apartment rents peaked at an average of $1,959 — 25 percent above current levels.

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