SAN FRANCISCO -- Apartment rents are barely fluctuating in almost all of the West's major markets except Southern California, where the rapidly growing population is giving landlords more pricing power, according to a quarterly survey released Thursday.
As usual, California accounted for the only major Western markets where average apartments rented for more than $1,000 a month as of March 31, said RealFacts, a Novato-based real estate firm. RealFacts' findings cover 20 Western markets.
According to the survey, the San Diego County average rent was $1,222 a month, a 2.7 percent gain over a year ago.
The San Diego apartment market the past several years has been going through a period of rising rents and declining vacancies. During the past couple of years, however, the rising number of apartments being converted to condominiums has been a growing concern, although total conversions are still a small part of the overall apartment inventory.
Last month, a MarketPointe Realty Advisors report showed the average rental rate here was $1,170 a month, up 2.8 percent from a year ago, and that the vacancy rate was at 3.26 percent, up from 2.76 percent in March 2004.
According to the RealFacts survey, the Los Angeles metropolitan area -- an expanse that includes Orange County -- was the most expensive at $1,397 per month, a 6 percent increase from the same time last year.
Those prices have prompted many Southern Californians to move inland. That phenomenon has helped turn Riverside and San Bernardino counties -- the so-called "Inland Empire" -- into the West's hottest rental market. Apartment rents there have climbed 6.6 percent during the past year to an average of $1,022 per month, RealFacts said.
At the opposite end of the spectrum, apartment rents averaged under $700 in four of the 20 Western markets covered by RealFacts: Tucson at $626; Albuquerque at $651; Salt Lake City at $667; and Boise at $699.
Southern California landlords are benefiting from an influx of new residents in the area. The U.S. Census Bureau says the five counties in and around Los Angeles added 260,002 people last year, a phenomenon that helped fill apartments. Apartment occupancy rates through Southern California are hovering around 95 percent, giving landlords more leverage to raise rents.
Even in Southern California, apartment rents are increasing at a dramatically slower pace than house prices. Mid-priced home in Southern California sold for $439,000 last month, a 19 percent increase from last year, according to DataQuick Information Systems, a La Jolla-based real estate research firm. The typical mortgage payment for a Southern California house stands at $1,983 per month, DataQuick said.
Apartment rents looked like an even bigger bargain in San Francisco Bay area, where home prices increased by 20 percent during the past year. In March, a mid-priced Bay area home sold for $568,000. That left the Bay area's typical monthly mortgage payment at $2,566, a 25 percent increase from $2,052 a year ago.
In contrast, Bay area apartment renters are paying just about the same amount as they did last year. In the five-county San Francisco metro area, March rents averaged $1,307, a $3 drop from last year. In Santa Clara County -- the heart of Silicon Valley -- renters are paying $1,280, just $1 more than last year.
The unusually wide gap between apartment rents and home values is making some economists nervous because they believe it's a sign housing prices are reaching unsustainable heights.
More apartment landlords appear to be mulling ways to capitalize on the rapid run-up in home prices. In the last year, 110 of the 11,000 apartment complexes tracked by RealFacts have been converted to condominiums.
Average rents in major Western markets:
Metropolitan area: average March 31 rent, percent change from previous year.
Los Angeles/Orange: $1,397, +6.0 percent
San Francisco/Oakland: $1,308, +0.1 percent
Ventura County: $1,308, +2.4 percent
San Jose: $1,281, +0.1 percent
San Diego: $1,222, +2.7 percent
Solano County: $1,063, -0.2 percent
S.B./Riverside: $1,022, +6.6 percent
Sacramento: $916, +1.7 percent
Seattle: $876, +1.5 percent
Denver: $850, +0.2 percent
Reno: $790, +3.8 percent
Las Vegas: $786, +4.9 percent
Portland: $736, +0.3 percent
Colorado Springs: $717, -0.1 percent
Phoenix: $726, +1.8 percent
Fresno County: $716, +4.7 percent
Boise, Idaho: $699, +0.1 percent
Salt Lake City: $667, -0.3 percent
Albuquerque: $651, +1.4 percent
Tucson: $626, +1.6 percent
Source: RealFacts Inc.