Apartment rents decline in US West as unemployment increases

LOS ANGELES: Apartment rents declined throughout the US West and South in 3Q as rising unemployment made it harder for landlords to raise their rates.

The average asking rent fell to US$965 (RM3,260) from US$1,002 a year earlier, said Novato, California-based RealFacts, which surveyed owners of more than 12,600 complexes. The occupancy rate dipped below 92% from almost 93% a year earlier.

US employers cut 263,000 jobs last month, more than forecast, and the unemployment rate rose to 9.8%, the highest level since 1983, according to the Labor Department. Job losses combined with cutbacks in consumer spending have put pressure on apartment owners.

“Renters are in a great position to secure favorable terms,” RealFacts said in a statement. “The conditions in the rental market reflect people’s attitude throughout the country. People are tightening their belts by reducing their spending.”

Of 33 metropolitan areas tracked, rents declined the most in the San Jose, California, area, RealFacts said. The monthly price of an apartment there dropped 10% from a year earlier to US$1,536 a month.

In California’s Oxnard-Thousand Oaks-Ventura region, rents fell 7.4% to US$1,429, and in the Seattle area they dropped 7.3% to US$1,036. Seven markets showed rent increases from a year earlier, RealFacts said.

The Bloomberg Real Estate Investment Trust Apartment Index fell 10% in the 12 months through Oct 20, compared with a 4.8% decline in the Bloomberg REIT Index and an 11% rise for the Standard & Poor’s 500 Index.

The apartment index of 13 companies includes Chicago-based Equity Residential, the largest US REIT that owns apartments, and Alexandria, Virginia-based AvalonBay Communities Inc.

The RealFacts survey covers more than 3.2 million units of rental housing in states including California, Florida, Arizona, Texas, Utah, Oklahoma, Colorado and Nevada. The closely held research company surveys apartment owners on a quarterly basis. – Bloomberg LP