RENTAL MARKET LOOKS HOT IN '04.

Byline: Gregory J. Wilcox Staff Writer

Los Angeles County's apartment market will remain strong next year from an owner and investor standpoint, thanks to rising rents and demand, said a study released Wednesday.

Job growth next year and limited new construction also indicate a favorable long-term outlook for investors, said the ``Apartment Research Report'' from Marcus & Millichap Real Estate Investment Brokerage Co., the nation's biggest real estate investment brokerage.

Home prices have made big annual gains this year, and, while appreciation is expected to moderate next year, it will still continue to increase. The supply of homes and apartments is tight, and that is not expected to change either.

``Soaring housing costs and a growing population are keeping the Los Angeles apartment market in a healthy state and will support stability over the long term,'' Lane M. Schwartz, regional manager of Marcus & Millichap's Los Angeles office, said in a statement.

Los Angeles will remain a seller's market as buyers are still competing for product, which is pushing prices up.

This year, median price for properties, the point at which half sell for more and half for less, in the less-than-20-unit category increased 8 percent to $97,000 per unit.

So far this year, there have been approximately 1,500 deals, putting the county on track to break 2002's record of 1,810 sales.

The median price of 100-plus-unit properties has surged 21 percent since, to $110,000 per unit.

Solid market fundamentals in 2004 will support an additional 5 percent to 8 percent gain in values, the company said.

The firm's market analysis found that.

--About 22,000 jobs will be lost this year, but 2004 should see a ``dramatic comeback,'' adding 67,000 jobs. Most of that growth will come from the professional and business services sector, which is forecast to add 23,000 jobs.

The manufacturing sector accounts for most of the region's employment woes and is on course to lose 19,000 jobs this year from 2002. Government employment expects 15,000 fewer jobs in the same period. Entertainment will account for the majority of new information-sector jobs next year.

--There is some new construction on line, with developers expected to add between 5,000 to 6,000 units annually through 2006.

Downtown is the focal point for builders, as nearly 1,300 units are expected this year and 1,600 units the next.

The construction will shift to locales like Lancaster, Valencia and Woodland Hills.

It still won't meet demand, though, as the county's population is expected to swell by 100,000 residents annually.

--Improving economic conditions will support increased demand in 2004, causing vacancies to decline by 30 basis points to 3 percent, an extremely tight market for someone looking for an apartment.

Properties that cater to moderate-income households, the bulk of the market, have maintained a vacancy rate below 3 percent.

--This means rents will rise by about 4 percent next year to an average of $1,195 a month. It is currently $1,140 per month.

Daniel Blake, a California State University, Northridge, economics professor and director of the San Fernando Valley Economic Research Center, has noted that rising rents make it hard for young people entering the work force for the first time to find affordable housing.

``When the kids tell you they can't afford the rents out there, they are not lying. They can't,'' Blake said.

Gregory J. Wilcox, [phone]

greg.wilcox(at)dailynews.com