Purchasing
- Your first home
- Your next home and move
- An investment property
- A vacation home
Refinancing
- To tap your home equity
- To save money
- To avoid rate increases
- To lower monthly payments
Home Equity
- Loans and lines of credit
- Finance major expenses
- Consolidate Debt
- Invest
San Diego Rent Will Continue to Climb
With home
prices and condominium conversions
slowing down, many renters expected
rental rates to decrease or at least
stop rising at its current rate. Emmet
Pierce of The San Diego Union-Tribune
explains that renters should not expect
any immediate relief in a July 19, 2006
article, “No letup expected in
rental rates.”
The RealFacts research firm released
a quarterly report July 18, 2006, which
showed that San Diego County’s
average rental rates for all types of
units in June was $1,276, an increase
of 3 percent from last year and a 1
percent increase from the previous quarter.
“For two-bedroom, two-bathroom
apartments, the average rent was $1,442,
a 4 percent increase from the previous
year.”
The rising mortgage interest rates have
caused a large amount of condominium
conversion projects to stall, thus allowing
for more apartment units. Thus, many
real
estate analysts have been watching
the market closely, wondering when
the rental rates will reduce. This may
never happen.
“If we end up with a large group
of people who are trapped in rentals,
who are not able to buy, we may see
an increase in rents of 5 to 6 percent,’
said Robert Pinnegar, executive director
of the San Diego County Apartment Association.”
As condominium conversions fail and
turn back into apartments, more people
will be “trapped.” “Brokerage
firm Marcus and Millichap holds that
in San Diego County, 25 percent to 40
percent of condos under development
or condos that were converted into condos
will return to the rental marketplace
over the next 18 months, spokeswoman
Stacey Corso said.”
This future trend is also expected to
be true for Las Vegas, Washington, D.C.,
Phoenix and most of Florida’s
densely populated cities.
“It is already beginning to happen,’
said Kent Williams, regional manager
of the firm’s San Diego office.”
Rental complex owners who did not sell
their property to become a condominium
conversion, are feeling the satisfaction
are making the right decision in not
having to deal with the mental and financial
stress of converting back into apartment
units.
Leo Frey, developer of the year-old
Allegro Towers rental complex in Little
Italy, said he thinks he made the right
decision to turn down offers to covert
his complex into condominiums.
“I have been in the business long
enough. I built this from the ground
up. I bought the land. I had it designed.
I was offered a lot of money to convert
it to condos but I resisted. I had offers
in excess of $100 million.”
Most investors,
with the exception of Frey, are now
scrambling to rent out enough apartment
units to make up some of the loss they
endured from the failed conversion.
There is no break in sight for prospective
condominium owner or renters. Condo
rates will rise and remain expensive
because their availability will be limited.
Renters should not expect their rates
to slow down because many renters will
be trapped for a while from buying
condos or other properties.