Renting in Orange County is Now Even Less Affordable
Competition for Housing Makes Renting More Costly
It seems renting—particularly single-family homes—is continuing its trend higher. And based on studies from one industry player, that means bad news for renters.
House rents averaged $3,114 a month in Orange County during the fourth quarter of 2016, according to Irvine-based HomeUnion, a company that helps investors buy and rent out houses in roughly a dozen markets throughout the country.
That’s up 22 percent, or $561 a month, over the past four years, vs. a 13 percent increase for apartment rents during the same period, figures from Reis Inc. show. Rents in Orange County average $1,827 per month. Another reason the market is so tight is bec ause there are more renters in the region and fewer homeowners.
When Prices Go Up they Don’t Always Drop Down Later
Research from real estate marketplace Zillow demonstrates high demand, low supply and basically little to none construction starts are raising rents on single-family properties.
Housing market research firm CoreLogic reported that the median sale price of an Orange County home made a record-high in June of $657,500. It is interesting to note that with a 20-percent down payment of $131,400, the monthly mortgage payment is $2,586 and with taxes and insurance included the monthly payment works out to $3,151 using a 4.25% fixed interest rate.
This means for the price of renting a home in Orange County for $3,114, you can pay the same amount and become a homeowner. The benefits of a homeowner include possibly higher tax write-offs using mortgage interest and property taxes, possible home appreciation, a fixed payment with no worry of rent increases years later, ability to rent out a room for more income without landlord approval.
If you don’t have a 20-percent down payment there are mortgage programs with just 5 or 10-percent down as well.
Top cities for rent increases
Orange County is ranked as the 11th highest market nationwide with significant single-family rent growth.
Other cities with prominent price spikes in single-family rents include Seattle (5.4 percent from the previous year); Salt Lake City, Utah (5 percent: Portland, Oregon(4.5 percent rise); San Diego (4.3 percent), Los Angeles (4 percent ); Atlanta (3.5 percent);Minneapolis (3.9 percent); Louisville, Kentucky (4.1 percent); Orlando (3.2 percent); Charlotte, North Carolina (3.1 percent), and Nashville (3 percent);.
The reason behind the incredible jump in rents is a mixture of increasing demand, low housing supply, and insufficient construction.
“There are simply fewer single-family homes to rent than ten years ago,” Zillow reported. “When the housing market crashed, investors acquired a lot single-family homes that went into foreclosure and made them rental properties. Nearly 1 in 5 of all single-family homes throughout the U.S. were rented in 2016, which is up from 13.5 percent in 2007.”
With low interest rates and fewer buyers, right now could be the best time to buy a home in Southern California.
