APARTMENT RENTS SOAR IN SOUTHLAND.

Byline: Staff and Wire Reports

Robust demand that outpaced supply continued to drive rent increases across Southern California last year with the biggest jump - 6.4 percent, to $949 a month - in the Inland Empire, an industry tracker said Wednesday.

In Los Angeles, rents increased 3 percent to $1,346 a month from a year ago, according to the study by Novato-based RealFacts.

Southern California ran counter to other major markets in the West as lackluster job growth curtailed demand and forced landlords to make concessions to fill space, the report states.

The average apartment rent in 15 of 19 major Western markets either decreased or edged up by less than 3 percent from 2002, the survey said.

The metropolitan areas surveyed are in California, Washington, Colorado, Nevada, Oregon, Arizona, Idaho, Utah and New Mexico. The RealFacts survey does not capture the entire apartment universe, just buildings of 100 units or more.

The heftiest rent decreases persisted in the San Francisco Bay area, where a high-tech bust that began in late 2000 resulted in mass layoffs and pared paychecks, forcing landlords to lower prices to retain and attract cash-strapped tenants.

Rents in Santa Clara County - the hub of the Silicon Valley - dropped 6.4 percent in 2003 to an average of $1,284, RealFacts said. Since peaking at $1,951 in early 2001, average apartment rents in Silicon Valley have plummeted by 34 percent, generating $8,000 in annual savings for renters.

In the three-county San Francisco metropolitan area, apartment rents dipped by an additional 4.8 percent in 2003 to an average of $1,544. San Francisco metropolitan rents have fallen by nearly $500 per month during the past three years.

Even with the steady erosion, the average price for a San Francisco apartment remains the most expensive in the West, remaining well ahead of the Los Angeles average of $1,346. The West's lowest apartment rents are in Tucson, Ariz., at a year-end average of $614.

The stagnant rental market largely reflects a feeble job market, said Caroline Latham, RealFacts' chief executive.

Although the overall economy recently has been expanding at an impressive clip, the recovery still hasn't spurred employers to hire substantially more workers - conditions that make it more difficult for landlords to find renters who can afford their own apartments.

``Job growth and apartment demand are pretty closely correlated,'' Latham said. ``It's turning into a much slower recovery than we had hoped for. It looks like it is going to take more time than we thought for things to stabilize.''

Apartment demand in recent years also has tapered off as a sharp decline in interest rates made it easier for more longtime renters to qualify for mortgages and buy their first homes.

While the conditions are saving renters money, they are also discouraging developers and lenders from pursuing new apartment construction - a phenomenon that could diminish the future supply of desirable housing. Latham predicted it will take sustained annual rent increases of 4 percent to 5 percent to encourage more building.