Bidding wars, rent hikes, dwindling inventory, financial burden, long searches – unfortunately, all these things have characterized the Orange County rental market as of late. Bidding wars have broken out all over the county this summer, not only to buy houses, but to rent homes as well.
As soon as a unit goes on the market, it is snatched up within the week. It has come to the point where applicants are offering to pay a year’s rent in advance or a large sum a month over the landlord’s asking rent. “The rental market is so crazy now, it’s almost like you’re buying a place,” Jane Lewis, property management director for Seven Gables Real Estate, said.
The problem in Orange County, like in many areas in the US, is that there are more people in need of housing than there is housing provided. This demand that outweighs supply causes rents to rise. The number of local residents who rent has been increasing for years in the wake of the foreclosure crisis to more than 62,000 households, or 17%, from 2007 to 2013. About 43% of O.C. households rent, while 57% own their own homes. Further boosting rental demand, millennials have been moving out on their own as jobs become more plentiful. Rental construction has not been able to keep up with this surge in renters.
Meanwhile, rents have been rising steadily in Orange County for five and a half years, but the pace has accelerated due to the economic recovery and rising employment. Rent hikes in large Orange County apartment complexes averaged less than $60 a month in the first half of 2014, according to apartment data researcher RealFacts. During the first half of 2015, average increases reached $105 a month.
Property managers are seeing vacancies getting multiple applicants and are filling quickly. Landlords get to pick and choose, and go for stable tenants with good incomes over renters with pets, large families or red flags on their credit record. Some are also subjecting would-be renters to new levels scrutiny. Paying for credits checks along with submitting pay stubs, driver’s license, bank statements and pictures of their pets are just some of things renters have to do just to be considered. This is taking a toll on tenants, who complain the search process has become longer, increasingly frustrating and financially painful.
Renters are moving to avoid budget-busting rent hikes when their leases come up for renewal. Some have been forced to downsize to afford rent and others have had to negotiate rates with their landlord.
Have you had to help a client navigate the difficult rental market? We would love to know your insights.
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