Apartment rents in West increase slightly; Las Vegas, Reno show stability

SAN FRANCISCO -- Apartment rents in the western United States are barely climbing -- good news for renters but actually a sign of a weakening economy, according to a new report.

The good news for renters is that while homeowners have watched the value of their houses drop, and subprime loan holders have seen their mortgages double, even triple, many apartment renters are paying just a few dollars more than they did a year ago, according to the report Thursday by RealFacts.

Of the 19 major Western metropolitan markets covered in the analysis, 14 experienced quarterly rent growth, but none more than 1.7 percent, and four actually declined.

Rents were flat in Las Vegas and edged up slightly in Reno.

That's consistent with national trends, which found average rents across the nation increase by only 0.6 percent since March 2008 and only 2.5 percent in the last year, the report said. Relative to other items in the household budget, apartment rent is lagging behind inflation, which was 5.2 percent in June 2008.

But what the slow rate of increase for rents actually means is that times are bad, said Caroline Latham, chief executive officer of RealFacts.

"Basically the rental market is reflecting the economy," Latham said. "For many people, there's a misperception that as home foreclosures go up, there is increased demand for rentals and a rise in apartment costs. We don't see that correlation. It's all the housing market and when there's a weak economy, all of it suffers."

RealFacts' analysis on some areas with high foreclosure rates found that rents were barely affected from the first quarter of this year to the second.

In Stockton, Calif., for example, which has the highest foreclosure rate in the nation, rents have risen 0.7 percent (and the occupancy rate rose by 1.0 percent). In Riverside/San Bernardino counties, rents have actually declined slightly, by 0.3 percent (with the occupancy rate also declining by 0.3 percent), and rents in Las Vegas have remained unchanged (though occupancy has dropped by 0.9 percent).