Friday, July 20, 2007

Sacramento Rents Rise At "Snail's Pace"

From the Sacramento Bee:

With supply still outstripping demand, thousands of Sacramento-area apartment dwellers continue to enjoy some of California's slowest-rising rents, a new report indicates. The region's monthly rents at large apartment communities averaged $955 monthly in April, May and June, according to rental industry tracker RealFacts. That was up $21 a month from the same time last year, a 2.2 percent increase. The slow rise ranked Sacramento 21st among 24 California metro areas for the size of rent increases in the second quarter.
[R]enters in the Sacramento area got a long-running break, with average rents increasing only 7.3 percent over the past four years, RealFacts reported.
A year ago, some industry analysts projected it was only a matter of months before Sacramento-area rents would follow the Bay Area and begin a more rapid rise. But that hasn't materialized in this region, where less than 93.5 percent of the units in large apartment complexes are occupied. Landlords typically don't raise rents unless a complex is 95 percent to 96 percent occupied.
From the Modesto Bee:
It's a good time to be a renter in Modesto. While apartment rents elsewhere in California keep rising, they remain flat in Modesto, according to statistics released today by the research firm RealFacts. The average apartment rented for just $808 a month in Modesto in April, May and June. That's about the same price paid throughout 2006.
When the Northern San Joaquin Valley housing market was booming, investors jumped in to buy homes they planned to resell, or flip, at higher prices or to use as rentals. As the market cooled, it became inundated with rental units, and that has helped hold down rents.


Diggin Deeper said...
This comment has been removed by the author.
Diggin Deeper said...

Diggin Deeper said...
"The slow rise ranked Sacramento 21st among 24 California metro areas for the size of rent increases in the second quarter."

Just another indication there's so much inventory out there, it holds down rents which puts further pressure on home prices. The rent vs own math has gotten to be a "no brainer" over the last six months and the inventory problem shows no signs of drying up.

Add it up:

Low rents with little capacity to raise prices.

High inventories with distressed properties growing each month.

Housing sales lowest since the early 90's

Employment beginning to crack (see Gwyn's find on the recent Sac Bee article) although one month is no trend.

Another wave of $500-700 Billion in arm resets coming over the next year. If past Sacramento inventory increases are indicative, you can bet Sacto will be in the news again many times due to this Alt-A/Subprime issue.

Add your own here...

Considering all factors, not quite the recipe for a healthy real estate market anytime soon.

Sellers must be getting weary and a bit roughed up by the lack of interest. Those that are really serious about selling don't have many options now.

Gwynster said...

Busy day lander - you bet! I checked the SacBee business section and it was like Xmas >; )

However the politico in me isn't surprised. I think we can look forward to many more interesting Friday press releases as time moves on.

paranoid renter said...

My rent has gone up 15% since 2003.

Bakersfield Bubble said...

Sacramento developer defaults in Bakersfield:

"Sacramento-based developer Don Hancock, the principal of both The Canyons and General Holding, is behind on his payments to lender Cascade Acceptance Corp. of Mill Valley by $47,067 as of July 11, the records show."

Patient Renter said...

Bakersfield, I thought you were on vacation? :)