Smallest rent hikes found for O.C.’s 3-bedroom units

October 18th, 2007, 12:01 am · 32 Comments · posted by Jon Lansner

Want to see how O.C.’s housing upheaval may hit the local apartment market? RealFacts tracks rents and occupancy levels at large rental complexes in O.C. Their third quarter report shows a slight downturn in annualized rent hikes (5.1% vs. 6.2% isn’t much relief) and a slight downturn in occupancy (still 95.7% full, not very empty!)

But take a gander at rents by apartment type, as shown in the box below, and how this third quarter’s typical rent increase compares what landlords could get a year ago. See where the weakest pricing is? In the largest apartments. It’s a good bet that new, higher-end apartment complexes add competitive pressures in the 3-bedroom niche. But it’s also a good bet that the scores of otherwise vacant, unsold homes put up for rent by their owners is stealing some good clients away from these big landlords …

3Q ‘07	Rents	‘06-’07	‘05-’06
Overall	$1,574	5.1%	6.2%
Studio	$1,162	4.5%	8.0%
Junior 1-bedroom	$1,282	3.6%	5.4%
1-bed, 1-bath	$1,371	5.3%	6.8%
2-bed, 1-bath	$1,488	4.7%	5.9%
2-bed, 2-bath	$1,810	5.3%	5.9%
2-bed townhome	$1,902	6.2%	5.4%
3-bed, 2-bath	$2,139	1.9%	4.5%
3-bed townhome	$2,417	3.2%	5.6%

• To read more Register coverage of the RealFacts report, CLICK HERE
• To read another tracker’s view of the O.C. market, CLICK HERE

Posted in: Apartments/Rents

You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

See blog content by category ...

ROC says:

October 18, 2007 at 8 am

Wow - that’s a lot of dough, especially with after-tax dollars.

What’s the largest square footage of any of these?

I guess 1,200-1,500.

Carlos says:

Housing in Orange County and California are long overdue for a healthy correction. Foreclosure in OC is similar to a nasty divorce with a painful process.

rants says:

rents will be going DOWN as the wave of unsold homes
floods the rental market aint that right landlords llooll

multiple choice

which will drop faster

a) the value of the U.S. DOLLAR

b) the price of homes in orange county

c) gary watts credibility

d) senator larry craigs pants in a public restroom

Sakakibara Says Dollar May `Plunge,’ Forcing Response (Update3)

By Stanley White and Kazumi Miura

Oct. 18 (Bloomberg) — The dollar may “plunge” in 2008, prompting the U.S., the European Union and Japan to intervene in foreign exchange markets, said Eisuke Sakakibara, Japan’s former top currency official.

U.S. economic growth may slow to less than 1 percent next year as losses on loans to homeowners with poor credit erode consumer spending and bank earnings, he said in an interview today in Tokyo. Sakakibara, 66, was dubbed “Mr. Yen” because of his ability to influence the currency market during his 1997 to 1999 tenure at the Ministry of Finance.

“Should growth fall below 1 percent, we could see a plunge in the dollar,” said Sakakibara, who is currently a professor at Tokyo’s Waseda University. “Some form of intervention would be necessary to stop it, and that would require coordinated effort from all three major economies.”

The dollar’s 7.3 percent decline against the euro this year and a global credit market slump will be the focus of discussion when Treasury Secretary Henry Paulson hosts policy makers from Group of Seven countries tomorrow in Washington. French Finance Minister Christine Lagarde has called for discussions over whether the European Central Bank should sell the euro to protect exporters’ earnings.

Greenspan Bullish

Former Federal Reserve Chairman Alan Greenspan doesn’t expect a rapid drop in the dollar should nations sell more U.S. Treasuries, according to people attending a forum in Seoul today. Japan, China and Taiwan sold U.S. government bonds at the fastest pace in at least five years in August.

Greenspan is “of the opinion that holdings of foreign- exchange reserves tend not to be moved easily,” said Kim Gyung Rok, chief investment officer of Mirae Asset Investment Management Co. in Seoul, who attended the presentation.

Sakakibara said falling U.S. interest rates will put off foreign investors. The Federal Reserve may follow its Sept. 18 interest rate reduction with a further cut before the end of the year to stem fallout from subprime mortgage defaults, Sakakibara said. It is likely to keep the target for the overnight lending rate between banks on hold at 4.75 percent on Oct. 31, he said.

The dollar fell to $1.4247 against the euro at 8:24 a.m. in London from $1.4208 late yesterday and approached a record low of $1.4283 reached on Oct. 1. It bought 116.50 yen from 116.68. The U.S. currency may fall beyond $1.45 per euro in 2008 and even further depending on the U.S. economy’s slowdown, Sakakibara said.

Intervention History

The International Monetary Fund yesterday cut its forecast for 2008 expansion in the world’s biggest economy to 1.9 percent from 2.8 percent. “There are serious risks ahead” because of the financial market turmoil, Simon Johnson, the IMF’s chief economist, said at a press conference in Washington.

Policy makers intervene in currency markets by arranging purchases or sales of foreign exchange. Japan hasn’t sold its currency since March 16, 2004, and last bought yen in 1998.

While Paulson has said repeatedly that a strong dollar is in America’s interest, he says the value of currencies should be set by the market. Under President George W. Bush, the Treasury has never intervened in the currency market.

The ECB bought euros in November 2000, seeking to boost the currency as it fell below 90 cents, following its launch in the previous year. ECB President Jean-Claude Trichet urged politicians to show “verbal discipline” on currencies in an interview with CNBC broadcast on Oct. 15.

The yen may approach 100 against the dollar next year as sentiment worsens for the U.S. currency, Sakakibara said. Japan’s currency climbed as high as 111.61 on Aug. 17, the strongest in more than a year.

“There’s more risk for the yen to strengthen next year, as the dollar’s problems grow,” Sakakibara said.

Scott says:

October 18, 2007 at 9 am

Smallets rent hikes for 3bdrms:

Note: This Data does not reflect “Detached SFH”

4 bedroom Detached Craftsman in beach area = 3.5 to pacific.
Current rent is $3400.00 so these figues are low in comparison.

The two bedroom detached craftsman 3.5 blocks to ocean = $2,250.
I can testify the two bedroom is much easier to get tenants for.

You can rent to:

A single person
A single person with 1 kid
A couple
A couple with 1 kid
Two college kids

You get the point. The larger units / SFH require more income.
In the RE hayday = early 2000’s
it was very difficult to find qualified tenants.
If a family had decent income and credit, they were buying a house.
Things were very different this last summer.
Because of the run-up in prices, I foud a much larger pool of tenants.

Expect rents to rise throughout the credit crunch in beach areas & OC.

When I first moved here in 1992,
rent for a 3 Bdrm detached SFH in MV was $1,100.00
today rent for that same house would be $2,250.00
Rents have doubled in 15 years.
It is safe to say they will double again in 15 years.

Who’s “isms” are funniest:

A) George W. Bush

B) Yogi Berra

C) Carlos

D) Rants

I vote for Carlos.

Housing is not a buble until it bursts.

Patricio says:

“Housing is not a buble until it bursts.”

OR…..

You did not buy at the top of the market like a dope until you sell, I can see your point of view Roc.

Inventories are going to rise for rentals, so here we go again with the basics supply and demand, and I bet they will continue to decline as more rentals become available.

Kim says:

Question:

Lansner is giving us stats from “apartments”, that I think are totally bogus. I know it is an “average”, but it is not $1810 for a 2bed 2 bath. It might be in some nicer areas, but you can get a 2 bed 2 bath in Anaheim Hills off Orangethorpe for $1500-1700/month.

Its true that 3 bedrooms are more difficult to rent than 2 bedrooms, but that is probably because the bulk of apartments have 2 bed 2 baths.

Alot of you guys keep mentioning how these figures are low for home rentals. It doesnt say anything about home rentals, just apartments.

I wonder what the figures would look if you combined the two.

Patricio:

Supply & Demand:

IN THE SHORT RUN:
In the over-developed areas of Irvine,
there may be some downward pressure on rents.

IN THE LONG RUN:
You had better stack your chips,
OC / LA is were all the jobs are,
Rents will only go up, up, up, up.

Renters:
This could be your last chance to buy on the correction phase in 2010

On the up swing in the year 2015 — 20

I predict rents for the same 3 bdrms for a solid $3,000.

ROC:

My favorite “Ism” was: Carlos the buble burster lloll ripsplitter ahahah

Kim:

Answer:
Read my blogg:
These rents are do not reflect SFH’s

IF the Data reflected SFH’s that would bring up the average.

I’ve been hearing about the coming collapse in rents for ages.

It’s not looking likes it’s going to happen anytime soon.

Time will tell.

I still think these rents are inflated.

Iflated compared to what?
Most renters pay 1,500 for a two bedroom.
Any service employee with a roomate or 2 incomes can afford that.

ROCSTAR:

If there is a crash,
It will be in the SFH market.
Everyone will at least need a roof over there head = rentals.
Again, this is were all the jobs are

Jimmy:

Were you at?

You are 1 up on all of us.
Multiple units in beach areas.

Explain what rents have done since 1991.
Explain were you think rents are going

Realistic Homeowner says:

More good news

Bonds opened the day with a nice rally. Jumbo and Conforming rates are moving lower.

Jumbo

30 year fixed 6.5%
5 year arm 6.25%
5 year IO 6.25%

October 18, 2007 at 10 am

I feel there inflated compared to other cities in OC. Like I said before, I know its an “average”, but it does not cost $1162 for a studio. You can get a 1 bedroom for $1200 in a decent area.

It almost sounds like the data includes SFR rentals. My neighbors home is renting for $2500/month and its in Anaheim Hills, 4 bed, 2 1/2 bath, 2600 sqft with nice size yard. So maybe the higher priced areas are drastically offsetting this, like Irvine and Newport etc.

I would much rather rent that home next to mine than a 2 bed 2 bath apartment.

morgagemaker,

I think you deserve to get bumped-up to this story.

mortgagemaker Says:
October 18th, 2007 at 9:01 am

“I’m way behind on this, but 100% financing on a purchase with below par credit at $417,000 and below is already avaialable with good rates and terms.”

jj-- says:

October 18, 2007 at 11 am

Realistic Homeowner,

Low rates can’t save housing, nor should we depend on it for stabalization. In a normal market, prices should not drop at traditional interest rate levels. Additionally, b/c low rates were a major catalyst for the boom, low rates can’t be the saviour of a crash. At some point, something has gotta give. Right now, it’s the dollar. If the fed isn’t careful, soon it will be BOTH housing and the dollar. Who wins there?

I don’t get why any objective person wouldn’t be in favor of a healthy correction that is needed. And boy is it needed. Keeping prices close to as they are now would require some major ‘tweaking’ of our entire economy that will only prolong our pain, and make the healing that much more difficult. I think this is why there is hostility towards a lot of bulls, b/c people don’t view them as objective, rather as salespeople, with an agenda. It’s obvious that prices went WAY beyond what a healthy, normal market can support. They should come back for the good of all, even the folks who made stupid choices and bought way beyond their means. Hopefully this will allow them to learn and prosper in the future.

More 100% Jumbo purchase programs are becoming available again

80/20 programs both full doc and stated

Affordable Jumbo purchase loans are definitely back

Realistic Homeowner:

Where can I get an 80/20 loan stated right now?? And what is the minimum FICO?

On the same note as above, needing/using exotic loans to maintain prices is a terrible sign too.

As evidenced by the turmoil as we speak, using investor style products (95 or 100% jumbos, or jumbo arms, for example) for normal SFR purchases is not a good thing. If the majority of folks need it, there are serious problems.

October 18, 2007 at 12 pm

Point Being: Realistic Homeowner & other say it’s good news. I think what it really means is that it is VERYbad news, b/c it means you NEED these non-traditional vehicles for traditional purchases. You’re treating the symptoms and not the core problem. Eventually the patient dies, and it looks like the housing market is finally going under.

For everyone’s sake, even salespeople should take the damn medicine! It’s a simple as accepting we had a “false spike” (as one blogger puts it) and getting back to normal pricing levels, which yes, would be at a premium for places like the OC compared to other parts of the US. The denial and failure to act is going to cause just as much trouble and trauma than the sickness itself.

I am still waiting….I checked out some jumbo loan products and the best I can find is a 660 FICO at 70% CLTV purchase. I cannot find anyone that has an 80/20 stated program anymore.

Again I need facts…

Realistic Homeowner = Unrealistic loan broker

He comes here to creat his own market,
it is in his best intrests to post this info,

Posts like:

What a great day for bonds!!

BUY NOW! Rates are at historic lows!!

Sounds like someone needs a commission check.

The lending hay days are over, come back to RE in 2010.

I know…

If he believed half of the stuff he wrote, he would back it up with facts. Obviously, he is not very confident, and probably broke at that!

October 18, 2007 at 1 pm

Kim,

Here are the lenders I use most frequently for Jumbo purchases

1. Home Savings. They have a 3 year IO with great pricing

2. Bank of America. Using their Fannie Mae “Flex Program”

3. Wilmington Financial They do 100% financing up to 1 million no MI

4. Wells Fargo They will do up tp 90% right now but are soon to have

an 80/20 program available.

There are others, but I don’t have time to look them up at the moment.

Most of these programs require a 680 fico score

Notice there are NO RATES??

1) 3 year IO with great pricing? Explain Great??
2) Bank of america / Fannie Mae what is the rate? How much down?
Most likely 6.5 with one point and 20% down. Who can afford that??
3) Wilmington will do 100% financing, that is great. whats the rate??
4) Wells up to 90% = at lease 10 % down. Rate ?? With 1 point??

NOTE TO ALL BLOGGERS:

Most single family homes are over $600,000 = SUPER JUMBO

Were are the rates for these???

Do the math on what 20% down with one point @ 6.5 would be??

Unatainable for most.,that is why:
most 1st time buyers went IO / Neg Am / Ein 2005/06/07

Scott,

Read my other blog. I found some of the rates but the others ask for the broker password to enter the site.

I know there are good programs out there. But for most “average” Americans making $50K a year can not qualify. I dont care what you give them.

It’s ridiculous how these shady brokers try to swindle you into these wonderful, great programs and oh look you can qualify if you put your mom, dad, sister, brother, grandma and uncle on it too.

Oh look everyone I bought a house and my deed is 12 pages long. No Thanks!!

I thought by this time the people slinging ARM and other toxic 100% no money down programs would be ran out of town tarred and feathered. The mold has been cast, there is NO loan program 0% aint going to fix this it will just have to play out.

Patricio & Kim:

I agree with you,
Get out the Tar and Feathers!!!

You are two strong headed tough women,
I would not want to get on your bad side! lloll lloll lloll lloll

pdu says:

October 19, 2007 at 12 pm

It gets old listening to the resident “landlords’ on this blog extolling the virtues of ever rising rents and chiding renters for their foolishness.

These guys either aren’t landlords or they are recent landlords and soon to be ex-landlords.

Today one can rent a decent SFR for around 4% of it’s “market value”.
The carrying costs to purchase that same SFR run around 9%.

Investors are out of the market for the simple reason that a 4% return on a 9% investment doesn’t pencil out too well.

Yes, I understand the tax benefits but I also understand the lost income due to vacancy and repair/rehab on rentals.
————-
With apologies to Patrick.net, here’s his take:

Prices still disconnected from fundamentals. House prices are still far beyond any historically known relationship to rents or salaries. Yearly rents are 3% of purchase price. Mortgage rates are 6.5%, so it costs more than twice as much to borrow money to buy a house than it does simply to rent an equivalent house. Worse, total owner costs including taxes, maintenance, and insurance are about 9%, which is three times the cost of renting. Salaries cannot cover mortgages. Anyone who buys now will suffer losses immediately, and for the next several years at least.
—————-

bob lustig says:

November 25, 2007 at 12 am

FIVE WAYS TO MAKE THE LOAN PROCESS GO FASTER:

We should say that “working with us” is the first way! When you let us help you find the loan that’s right for you, you truly are taking advantage of some of the area’s best technology and expertise to get you a loan decision and funding on your loan quickly. But here are five “other” ways you can speed up the process of getting a mortgage loan:

1. Have everything ready and in one place. You will be provided with a list of things you might need in support of your mortgage application. If you get them all together and keep them in a safe, portable place like a special envelope or folder, you can cut down on time spent searching for things we may need. Also, you’ll help cut down on your own anxiety and confusion.

2. Be honest and complete when you fill out your application. “Fudging” your employment or residence history or omitting open credit accounts you’d rather not have considered doesn’t increase your chances of getting a favorable loan. In 100 percent of cases, it makes it harder, and take longer.

3. Respond promptly to requests for additional information. During processing, we or the lender considering your loan may need additional information. Provide it as soon as you get the request, or return the call as soon as you get the message.

4. Be prepared to explain derogatory items in your credit report. This is really part of number 2 above. If you had an illness or a divorce where you missed or made late payments, or you have other instances of late payments or delinquencies on your credit report, be prepared to explain them. Be honest, and don’t be nervous! The loan processor isn’t judging you, they’re trying to fill in all the blanks in their paperwork.

5. Let the appraiser in! The appraisal is one of the lengthiest parts of the mortgage loan process. Studies have shown that the single biggest factor in appraisal “lag time” is the appraiser’s inability to reach the homeowner to make an appointment. If you’re refinancing and the appraiser calls to make an appointment, make it as soon as convenient for both of you.

And remember that the appraiser doesn’t want to buy your house. He or she will say what the house is worth clean and tidy and in reasonable repair, even if you have some dirty laundry on the laundry room floor or dirty dishes in the sink. Cleaning doesn’t get you a higher appraisal! Letting the appraiser in as soon as possible gets you a loan faster, though.

Pro Mortgage Corporation
Toll Free: 1.888.999.2186 ask for Bob http://www.1calrefi.com…….

Slice	Price	Ch.	Sold	Ch.
House	$500,000	+18%	1,833	+11%
Condo	$290,000	+7%	881	+22%
New	$617,500	+24%	171	-17%
All OC	$435,000	+10%	2,885	+12%

Orange County Register