Flat is good in Southern California’s rental market after going through two years of drops, say analysts at the University of Southern California’s real estate center in its annual apartments report. Experts at USC’s Lusk Center for Real Estate on Wednesday reported rents in San Diego County and other key counties in the region were largely flat in 2010 and are expected to remain so in the next two years.

“While we are no longer hemorrhaging jobs, home affordability remains bleak in some areas, both of which bode well for the multifamily market,” said Richard Green, director of the USC Lusk Center and co-author of the annual forecast, in a statement. “However, it is unlikely that rents will rise until the greater economic health of the region improves and some of the excess inventory in the housing market disappears.”

In the report, San Diego County was the only major metro area to see a drop in rents last year but it was slight: They fell 0.2 percent to an average monthly rent of $1,320. Occupancy rose 0.4 percentage points to 95.4 percent. Stability on both fronts is likely due to job creation. The report says that 5,200 jobs were added last year in the region and another 10,000 to 20,000 are expected this year.

Overall, 26 of 40 sub-markets in Southern California saw flatness or increases in rents in 2010, compared with 3 out of 40 the previous year. The report’s authors say the increase in rents is likely due to “a dwindling supply” of homes and condos for lease and improvements in the country’s economy. The forecast for 2011, according to Lusk experts?

“We forecast virtually flat average rents and vacancy rates for Orange County, San Diego County and the Inland Empire over the next eight quarters. We expect Los Angeles County to experience a modest decline in average rents and vacancy. For the second year in a row, we expect Los Angeles County to be the weakest performer in terms of average rent changes.”

Lily Leung U – T

February numbers boosted by the leap year’s extra day

Home sales in San Diego county and throughout Southern California and throughout Southern California rose in February due to continued strong investor activity and the fact that it was a leap year, which tacked on one more day of sales to the month, according to a report Wednesday from local real estate tracker DataQuick. In San Diego county, 2,709 properties were sold in February, up nearly 15 percent from January.

That surge marks the largest January-to-February increase since 2000, according to DataQuick records that date back to January 1988. When comparing February with the same month a year ago, sales rose 16.3 percent. The Southern California region, which includes six counties, recorded its highest number of February sales since 2007, heavily influence by continuing demand for properties priced at less than $300,000.

“February sales got a big boost from investors and others paying cash for relatively affordable homes, as well as from an extra day’s worth of sales thanks to the leap year,” said DataQuick President John Walsh in the latest housing report. “Without the latter, sales might have been up a bit, but not to a five-year high. It’s just one more reason for us to remind everyone that January and February usually aren’t good months to use for forecasting purposes.”

San Diego County’s median price for all homes sold in February was flat from January at $305,00 and down 1 percent from February 2011. Buyers, especially investors, in the county and throughout Southern California, are still chasing value. The sale of lower-priced properties (less than $300,000) in Southern California increased 9.5 percent from a year ago. In the $300,000-$800,000 range, they fell 0.8 percent. In the $800,000-plus range, sales fell 12.6 percent. “The big picture remains one where the bottom of the housing market continues to see much of the actin, while move-up activity remains sluggish,” Walsh said.

Lily Leung U-T

Rancho Mesa’s very own Edmundo Villa recently took the oath of office to represent the State Council of Real Estate Professionals for the State of Baja California, Mexico on the International Relations Committee. The event took place on January 26 and was sponsored by the National Chambers of Commerce for Mexico (CANACO) Tijuana and the State Council’s Baja California chapter. Attending the event was a representative of the State Governor of Baja California, the Secretary of Infrastructure and Social and Economic Development, the President of CANACO, and a representative for the Secretary of Tourism for the State of Baja California.

A local Look

The San Diego County housing market ended 2011 with a mixed bag: the median home prices dropped from a year ago, down 5.4 percent to $315,000, but sales rose during the year-end rush to close, based on DataQuck’s December report. To check last month’s sales and prices in the county by Zip code:

They dropped 6 percent from $335,000 in Nov. 2010 to $315,000 in Nov. 2011

5/8 economists in the Union tribune believe that their will be an increase.

Alan Gin from the University of San Diego voted yes.  “2011 prediction, $350,000; 2012 prediction,$320,000. The increase will not be significant. Many factors suggest a more significant increase, such as positive job growth and a falling unemployment rate, interest rates at historic lows, and low levels of new housing construction. But there are just too many properties out there in various stages of distress, which will hold the increase to a modest level. Some analysts expect a rebound in fourth quarter of 2012, but I think it will be 2013 at the earliest before there are significant price gains.”

James Hamiltion: UC San Diego voted No. “2011 prediction, $333,000; 2012 prediction $312,000. The biggest price declines are behind us, but I still think it’s very possible that we’ll see further modest decreases before the market picks back up. The unemployment rate will still be very high by historical standers by the end of the year, and renting is still more attractive than buying for many households. Developments in Europe could put more strains on credit markets.

Lynn Reaser from Point Loma Nazarene University voted yes. 2011 prediction, $336,000; 2012 prediction, $325,000. Several forces should drive a modest rise in home prices this year. Job growth has picked up the unemployment rate is slowly subsiding. Mortgage rates should remain near historic lows. Affordability has improved markedly thanks to the drop in both home prices and interest rates. The rise in apartment rents has also made ownership a more attractive option. The overhang of foreclosed homes, particularly in the inland areas, and high standards for loan qualification, will still limit the overall rise to about 3 percent, taking the median price to #325,000 by year-end.

Marney Cox from San Diego Association of Governments voted no. 2011 and 2012 prediction, $300,000. The significant hurdle of clearing the excess inventory of distressed properties is not yet complete. The foreclosure process is expected to speak in 2012 and liquidations, the following year. This additional supply is expected to push the median home price down 5 percent during 2012. The faster foreclosures are processed and returned to the market for sale, the more downward pressure on home prices and a quicker return to a normal housing market. To facilitate this process, regulators are considering a plan to sell fore closed properties to investors who would renovate and rent them’ preventing this correction only delays the inevitable, pushing the construction sector recovery off into the future.

With 2011 behind us its time to turn our eyes to the upcoming year and all the changes it will bring. If there is anything we learned in the last year, its that the shaky and unpredictable housing market has played a large role in the emergence of a focus on rentals both locally and nationally.

Alan Pentico, executive director of the San Diego County Apartment Association, recently spoke with the Union-Tribune here in San Diego about his thoughts on possible trends for the upcoming year.

“Social media will play more of a role in renter-landlord relations…The plan is to increase engagement between both groups.”

With more and more people becoming comfortable connecting via social media channels such as Twitter and Facebook, its no surprise that the upcoming year will see an increase in companies focusing on their online presence to better communicate with customers.

“More first-time landlords are entering the market. Given falling home prices, consumers are snapping up properties as investments…”

While at first the idea of taking on the role of property manager seems like a smart one given the consistently low price of housing in San Diego over the last few years, it can be a trying task for the under prepared.

Some of our recent Landlord Lesson’s posts are designed to address this very issue. There are a multitude of laws, regulations, and city-specific rules that must be closely followed in order to avoid a lawsuit or court-room fiasco. Not consulting a professional property management firm or a specialist in real estate law could wind up being a costly mistake.

While we don’t know what the future holds, you can be sure that we’re as prepared as we can be. If you are considering renting out one of your properties or even just looking into investing, Rancho Mesa is your go-to source for the latest information and insight. Here’s to a great year!

Image: NASA

County employment has grown by 2.2% so far this year – second-highest rate in state

San Diego County’s jobless rate dropped to its lowest point since the spring of 2009, as the region continued to have one of the state’s highest growth rates. The jobless rate fell from 9.7 percent in October to 9.2 percent in November, according to data released by the state Employment Development Department on Friday. The county added 8,000 jobs in November, although most of that came from seasonal hiring in stores and shopping malls. After weeding out those seasonal fluctuations, the county added a net total of 1,600 jobs. And if the jobless rate were similarly adjusted to reflect the seasons, it would probably be 9.4 percent, said Lynn Reaser, economist at Point Loma Nazarene University.

But even with the adjustment, that rate is the lowest in more than two years. And Reaser noted that drop in the jobless rate occurred even though more workers are re0entering the job market. “On balance, San Diego’s job market is far from robust but it is posting gradual improvement,” she said. Besides retail, which added 4,800 jobs, the greatest growth came from health care, which added 3,100. But those gains were offset by declines in other areas, especially construction, which lost 1,000 jobs. On a year-to-year basis, San Diego County has added 26,600 jobs, with 2.2 percent growth rate. In California, only Silicon Valley has a higher growth rate – 3.3 percent.

California also cut its unemployment rate last month, from 11.7 percent in October to 11.3 percent in November. But its growth rate for job creation is slower than San Diego’s at 1.7 percent. “The California story is still a tale of two economies: by geography and by industry,” said Steve Levy, director of the Center for the Continuing Study of the California Economy in Palo Alto. “Job growth remains centered in the urban coastal regions and in the technology, trade and tourism sectors.” Levy said the reason that jobs are growing in San Jose, San Diego and San Francisco is that “these areas are seeing a flurry of startups, IPOs coming to market, expanding exports and a rising level of optimism about the future.”  On the other hand, Levy said that November did see the beginnings of a job recovery in other areas that had been lagging, including the Sacramento region, the eastern half of the Bay Area as well as the Inland Empire. “Across the board, in every region, the unemployment rate came down,” noted a report from Beacon Economics in Los Angeles. “Moreover, the drop has occurred despite labor force increases.

This means that unemployment rate is genuinely improving as a result of real improvements in the economy – something that bodes well for future conditions.” After seasonal adjustments, based on preliminary calculations from company payrolls, the state added only 6,600 jobs in November – much smaller than in recent months. But Beacon notes that the preliminary payroll data has been continually revised upward after more numbers come in from the field. The number for October, for instance, was just revised upward by 11,900 to 37,000 jobs. And 27,400 jobs were added to the September figures, creating a total gain of 83,400 jobs over the past three months. In light of the recent string of upward revisions – which often occur as the economy is turning a corner – Beacon suggested that the weak November figure may be nothing more than “a statistical anomaly that will be corrected next month.” A household survey of families suggested a gain of more than 100,000 workers in November. Although that survey is considered less reliable than the payroll survey, it does include self-employed workers, ranging from household maids to business consultants, who rare not included on payrolls.

“The important thing is that we continue to gain, and are up 211,400 jobs since January of this year,” said Michael Bernick, a former head of the Employment Development Department who is currently an employment specialist affiliated with the Milken Institute in Santa Monica. The state’s 1. Percent growth rate would be very strong in a healthy economy. But in an economy that is crawling out of a recession, economists say a growth rate of 3 percent to 5 percent is needed in order to make a sizable dent in the jobless rate. “November’s good news is tempered by the realization that there are still 1 million jobs to recover in California from before the recession and that process of recovery is under way but still much slower than hoped for or needed,” Levy said. “And political gridlock in the state and nation together with economic turmoil and a likely recession in Europe provide headwinds for the state’s now expanding economy.”

Dean Calbreath U-T