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Rents Rise as Home Prices Plummet

Average rent prices ticked up 2.5 percent, or $33 a month, to $1,344 a month in the last six months in San Diego County, according to MarketPointe Realty Advisors, which tracks real estate trends in Southern California.

The September survey of apartment complexes with 25 units or more shows a “markedly higher rate of increase” compared to the previous six months, when average rental rates climbed 1.5 percent, MarketPointe reported.

On the year, the 4.08 percent increase is about the same as the 4.1 percent increase the previous year between September 2006-2007.


As rents are increasing, vacancies are decreasing. Vacancies declined to 2.25 percent in the same period. The rate had fallen from 3.63 percent from Feb. 29.

“We saw a drop in the vacancy rate over the last six months and we’ve seen the average rental rate go up about 4 percent in the last year,” said MarketPointe President Russ Valone. “We are seeing that the rental market seems to be benefiting a little from the overall softness of the for-sale housing market.”

Valone said he believes that more tenants are competing for apartments as owners lose their homes to foreclosures and tenants are evicted from investor-owned homes in foreclosure.

Stricter lending requirements are also keeping people from buying properties.

“Buyers who would go into this market can’t get in there,” Valone said. “There’s also a fourth element. Renters sitting there who would have the ability to think about buying are waiting, because maybe there’s a little more downward pressure in pricing.”

It could be months before homes in foreclosure are sold as banks take their time valuating assets, he said.


Bank-Owned Properties

Banks owned 6,841 foreclosed properties in the county as of Aug. 31, but only 2,000 are listed for sale.

Another 15,000 properties are scheduled for auction or in pre-foreclosure, said Brian Yui, CEO of HouseRebate.com.

Soaring foreclosures have meanwhile become the centerpiece of the nation’s financial crisis.

A new report out by First American CoreLogic, a member of First American Title, shows that foreclosure filings in the last 12 months have increased 62 percent in the San Diego metro area compared to 2007.

There were 44,500 foreclosure filings in the past 12 months, compared to 27,500 in the same period last year, and 10,500 in 2006.

And recently La Jolla-based DataQuick Information Systems reported that median prices of new and existing homes countywide have fallen to their lowest level since 2003. Median prices were $350,000 in August, 26.3 percent lower than August 2007, DataQuick reported Sept. 17.

The most recent median price was 32.4 percent lower than its all-time high of $517,500 in November 2005.

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