Analysis of local multifamily markets in California by the University of Southern California Lusk Center for Real Estate revealed that all four of those studied performed well in 2011 and projected additional growth through 2013.
Researchers reported that the Los Angeles, Orange and San Diego counties and the Inland Empire region all improved in rents and vacancy rates last year, with only one of 40 submarkets examined failing to exhibit rent growth. A year ago, 26 markets had either flat or growing rents, and only three experienced rent growth two years ago, suggesting a substantial improvement has taken place. While rates will vary, projections suggest that construction will contribute to slowing rent increases in 2013.
"A sharp drop in new construction, the dwindling supply of shadow-market units, and improvements in the macroeconomy have strengthened fundamentals on both the supply and demand side," said Tracey Seslen, author of the forecast. "This is boosting asking rents, reducing or eliminating concessions, and filling units."
Average rents are expected to go up by about 3 percent in each of the four areas except Los Angeles, where projections call for 7.9 percent growth in 2012. Rental managers and owners may be able to make more aggressive use of tenant credit screening given fairly low vacancy rates and correspondingly high competition for housing.