DEMAND KEEPS AREA PRICES HIGH.

Byline: Barbara Correa Staff Writer

An unfurnished studio in Beverly Hills, a two-bedroom house in North Long Beach and a two-bedroom, two-bath apartment in Whittier have one thing in common: They are all renting for $1,050 a month.

That's the average asking rent right now in Los Angeles, San Bernardino and Ventura counties, according to data from Reis Inc., a research firm that tracks apartment rents at buildings of 15 units and up. And while $1,050 represents an aggregate for Southern California, a different set of factors, depending on area, makes rent trends unique in each market.

On the whole, Southern California apartment rents, supported by continuing migration and flat construction, are rising at a time when rents almost everywhere else - including in Northern California - are easing.

But there are signs of slowing in the Southern California rental market, due in part to relatively high unemployment and easy financing for home purchases.

A report from RealFacts, a research firm that follows rent trends at larger residential buildings, found that while rents in Los Angeles County climbed almost 6 percent in the year that ended in March, most of that increase occurred in the second and third quarters of 2002. Since then, the total increase is under 1 percent.

It's no renter's market, however.

``There's still an upward push in rents,'' said Kevin King, senior investment associate at the Long Beach office of Marcus & Millichap, a real estate investment brokerage that also has offices in Encino, Ontario and downtown Los Angeles. He said $1,050 would currently rent a one-bedroom apartment in Belmont Shore, a studio in one of the newer developments - like CityPlace downtown - or a two-bedroom apartment on the east side of Long Beach.

He said that even though he's seeing some higher-end apartments being vacated by homebuyers, prices aren't dropping because of the steady influx of new residents. ``We draw from other beach cities in Orange County and L.A.,'' he said. Compared with rents in those areas, Long Beach's are below market.

Rents are topping out in higher-income areas of West Los Angeles and the West San Fernando Valley as the effects of recessionary trends, the stock market slowdown and dot-com decline hit the high-end rental base of $1,800 a month and up.

``There's definitely been a big drop-off in rent growth. There's been a wake-up call in terms of how much rent growth there can be,'' said Robert Hart, a senior managing director at Kennedy Wilson, a Beverly Hills-based real estate company that remodels apartment buildings of 100 units or more.

Still, $1,050 doesn't buy much in those areas - a one-bedroom guest house in Woodland Hills, a studio in Westwood. It buys a bit more - a one-bedroom apartment - in Simi Valley and within walking distance of Old Town Pasadena.

Moving east, the pickings get better. In Covina, $1,050 rents a two-bedroom, one-bath apartment, and in Fontana the same money gets you a three-bedroom, two-bath place in a building with a pool and Jacuzzi, according to rental ads posted at Rent.com.

That benchmark would get a standard two-bedroom, two-bath in Rancho Cucamonga in an older property, built 10 to 15 years ago, said Randall Lewis, executive vice president of Inland Empire's Lewis Apartment Communities. ``In Ontario, $1,050 would get you the same floor plan, but it would be $60 less. In Loma Linda it would be $900.''

While rent increases may be easing somewhat, there isn't any evidence of a significant downturn on the horizon, because demand is still way above supply, especially for low-income housing. Due to appreciating costs of land in the region, a more cumbersome permit process and not- in-my-back-yard pressure on local politicians, there isn't much interest among developers in building lower-income rental apartments - and that's true for L.A., San Bernardino and Ventura counties.

``The only thing that makes sense to the investor is to build high-end luxury apartments,'' said Robin Ossenbeck, a partner at Hendricks. There's also a huge incentive for investors to rehabilitate second-tier buildings - usually older, with fewer amenities and in less desirable locations - and then recoup their investment by charging higher rents.

The affordable housing sector may get a boost from $18 million released last month toward the construction of 13 new low-income buildings throughout the city of Los Angeles. The money is part of $100 million Mayor James Hahn pledged to affordable housing last year. City officials hope to use the first installment as leverage to boost affordable housing funding to $1 billion, said Sam Mistrano, acting executive director of the Southern California Association of Nonprofit Housing.

The buildings are slated to go up in the San Fernando Valley, South Los Angeles, East L.A. and downtown.

CAPTION(S):

3 charts

Chart:

(1) Ventura County

(2) San Bernadino County

(3) Los Angeles County

SOURCE: Reis, Inc.

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