Apartment rents up in Western U.S. as lending tightens

SAN FRANCISCO -- Apartment rents throughout the West, including Las Vegas and Reno, are rising amid tougher borrowing standards that have made it more difficult for many people to buy a home.

The average cost of renting an apartment in September increased from last year in all 20 major Western markets covered in a quarterly survey released Thursday by Novato-based research firm RealFacts.

The severity of the rent increases varied, rising by double digits in Silicon Valley and Seattle, while hovering in a range of 1 percent to 2.5 percent in much of California's Central Valley, Las Vegas and Colorado Springs, Colo.

It's too early for definitive conclusions. But a credit crunch that has made it tougher for people with blemished credit or below-average incomes to buy home loans is probably helping to lift apartment rents by propelling demand for the living space, RealFacts spokesman Chris Bates said.

Other factors lowering apartment vacancy rates also have given landlords more leverage to raise rents.

For instance, high-paying jobs in high-tech hubs like Silicon Valley and Seattle are contributing to rent increases there.

Anecdotal evidence suggests that at least apartment renters who could qualify for a mortgage are holding off on buying a home because they're worried about real estate prices falling even further.

Hundreds of thousands of borrowers are expected to lose their homes during the next two years as their adjustable rate loans reset to dramatically higher payments, but the foreclosures that have occurred so far don't appear to be fueling the apartment rent increases, Bates aid.

Los Angeles and Orange counties remained the West's most expensive metropolitan market to lease an apartment, with September rents there averaging $1,630 -- up 5.5 percent from last year.

Rents are rising the fastest in Silicon Valley, a high-tech heartland that's feeding off the success of online search leader Google.