Ventura County Experiences Strong Rent Growth in Some Markets
Renter demand continues to grow, buoyed by modest improvements in the local economy and employment, as well as demographic trends. Increased consumer confidence led to additional household formation, although at a slower pace than would typically occur in a more robust economy. While the apartment rental market is expected to remain strong, competition from newly constructed units and from the shadow market of investor-acquired condos and homes may lead to slightly slower rent appreciation in the coming year.
The countywide vacancy rate, which has been below 4% for the past 36 months, fell to 2.8% in July 2013 leading to solid rent appreciation in most sub-markets. Occupancy levels improved in all but two sub-markets. The greatest gains were in the Heritage Valley, with Fillmore’s vacancy rate dropping dramatically from 6.2% in July 2012 to 1.5% in 2013; and Santa Paula where more than 10% of units were vacant in January of 2012, falling to 7.3% by last July, and currently at just 2.1%. The only cities occupancy levels fell were in Ojai, with a current vacancy rate of 2.7%, up from 1.9% last July; and in Simi Valley currently at 4.4%, up from 2.3% a year ago.
The July 2013 countywide average rent of $1,515 ($1.77 per sq. ft.) has risen 3.3% since July 2012. The greatest rent appreciation was for three-bedroom units, up 4.8% countywide, to an average of $2,040. Three-bedroom units were clearly in high demand in Thousand Oaks and Moorpark, which saw staggering rent increases over the past year of 10.4% and 9.7% respectively. In Simi Valley, three-bedroom rents decreased by 1.3%, contributing to a 0.6% decline in Simi’s overall average rent during the past year. Other areas of exceptional rent growth included studio units in Ventura, up 10% from last year to $1,072 ($2.30/SF); and in Camarillo where one-bedroom rents jumped 8% to $1,396 ($1.94/SF). The Oxnard/Pt. Hueneme market improved slightly with a dip in vacancy to 2.9% (down from 3.6% in July 2012) and a modest 2% rent growth for new overall average of $1,370.
Sustained job growth and associated household formation will support solid market dynamics next year. However, rent appreciation will be moderated by affordability, especially if employment growth continues to favor hospitality and other lower-wage sectors. With 35% of income dedicated to rent, residents need to earn over $55,600 annually or $27.81 per hour to qualify to rent the average apartment in Ventura County. There may be temporary spikes in vacancies in isolated areas as new units that are being developed complete initial lease-up. Overall, occupancy levels are expected to remain above 96%. Modest rent growth of 2.5-3.0% is anticipated over the coming year.
