Surplus homes help keep area rental rates low

Last Updated 12:38 am PDT Thursday, October 19, 2006
Story appeared in BUSINESS section, Page D1



	Sacramento-area renters continue to pay some of California's slowest-rising rents, even as the monthly payments have risen sharply the past year in most of the state's other major cities, according to an apartment industry researcher

	The reason: more supply than demand in a Sacramento region that built thousands of new apartments in recent years. The area's 94.2 percent occupancy rate -- barely up from 93.9 percent a year ago -- is the lowest for all of California's 23 largest metro areas, according to Novato-based RealFacts, which tracks trends in the apartment industry.

	Industry experts also report a growing surge in single-family homes being rented as owners tire of trying to sell them in a sluggish housing market. That trend has actually led to lower rents in some cases and is likely to play a significant role in keeping apartment occupancy rates lower.

	"I've actually seen rents go down," said Sheri Lutrrell of Sacramento-based Pacifica Management, which leases houses. "Even my real strong markets like Gold River, I'm lowering them $200 or $300."

	Janet Regan, a broker with Citrus Heights-based Horizon Properties and president of the Sacramento chapter of the National Association of Residential Property Managers, said some home sellers are giving up.

	"We use to have all these different reasons why people put up their houses for rent. Now it's, 'I can't sell my house,' " she said. "These are people who have moved to other cities and other states. They're stressing."

	According to RealFacts, the region's average monthly rent at apartment communities was $948 in July, August and September, a $24 increase from the same time last year. Monthly rent averaged $710 in Yuba and Sutter counties. The highest rents for the 378 large area apartment communities surveyed by RealFacts was $1,250 in Davis and $1,169 in Folsom.

	Statewide, rents average $1,339 a month.

	The combination of supply and demand factors is pushing the region toward a fourth year of slow-rising rents, even though analysts have maintained through much of 2006 that the trend is nearing its end.

	Now, Barbara Lemaster of Sacramento-based M&M Property Management, one of the region's largest apartment managers, believes the trend to slow-rising rents may end after the winter months

	"I have clients who live in the Bay Area and say rents have gone up. I haven't seen it happen yet," she said.

	Rents have risen just 2.6 percent the past year in El Dorado, Placer, Sacramento and Yolo counties, and 1.3 percent in Yuba and Sutter counties, RealFacts reported.

	That compares with a 10.4 percent rise in San Jose, 7.5 percent in the overall Bay Area and 7.4 percent in Los Angeles and Long Beach. Rents also have risen 6 percent or more in Bakersfield and Riverside-San Bernardino as more residents compete for fewer apartments.

	Data for Amador and Nevada counties were not available.

	"Sacramento definitely has lagged, particularly when you compare it to the Bay Area," said RealFacts spokesman Chris Bates.

	An estimated 35 percent of households in the capital region rent.

	The Bee's Jim Wasserman can be reached at (916) 321-1102 or jwasserman@sacbee.com.

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Surplus homes help keep area rental rates low

By Jim Wasserman - Bee Staff Writer