SAN FRANCISCO — A sturdy economy saddled Southern Californians with the West's highest apartment rent increases last year, while a high-tech shakeout continued to deflate prices in the San Francisco Bay and Salt Lake areas, according to a study released Tuesday.
Apartment rents rose by 7 percent in Southern California's hottest market — San Bernardino and Riverside counties — and fell 9 percent in the heart of the Silicon Valley, according to figures compiled by RealFacts, a Novato research firm.
Along the Wasatch Front, rents were down 1.2 percent in fourth quarter over the same quarter a year ago.
Yet for the year ended Dec. 31, 2002, rents actually climbed to $689 a month, an $18 average increase over the previous year. Ogden witnessed the lowest rents at $516 per month. Park City continued to lead the state with the priciest apartments at $1,001.
In spite of the slight increase, occupancy rates in the Salt Lake and Provo areas slipped four percentage points last year, from 96 percent to 92 percent, causing landlords to lure renters with first month's free rent and other attractive incentives as Utah's economy continued to sputter.
Last year Utah struggled with its lowest job growth in 48 years and saw its unemployment rate climb to 6 percent, the highest rate in a decade.
California's fluctuating rents contrasted with most other major Western markets covered by RealFacts. In the regions outside California, rents barely changed everywhere but Tucson, Ariz., where prices climbed by nearly 4 percent to an average of $609 per month.
RealFacts polled 7,400 apartment complexes in 10 states.
The 2002 data reflected a trend that began to emerge in early 2001 as the aftershocks of the dot-com bust began to jolt the Bay Area apartment market.
As the high-tech slump deepened, once-booming Silicon Valley and San Francisco companies fired more and more workers. The purge prompted many people to leave the Bay Area, driving up apartment vacancies and forcing landlords to lower rent that had soared during the region's flush times.
Carol Morris, vice president of Triton Investments, a Salt Lake-based business that owns 13 rental properties in Utah, blamed Utah's rising vacancy rates on low-interest mortgage rates.
Triton's properties have seen vacancy rates increase to 8 percent in 2002, up from 3 percent the previous year.
"The vacancy rates have definitely gone up," Morris said, "but the rents have not gone up. We have kind of been frozen. I think a lot of times now renters get a lot of rental concessions."
Even as the Bay Area has struggled, Southern California has remained on stable ground, largely because of a more diversified economy. The movie industry — a Southern California stronghold for decades — also has thrived, helping to insulate the region.
Those dynamics contributed to Los Angeles County's average rent of $1,299 at the end of 2002, a 6 percent increase from the previous year, according to RealFacts.
The 7 percent increase in San Bernardino and Riverside counties — known locally as the Inland Empire — pushed average monthly rents to $892. In San Diego County, average rents climbed 5.5 percent to $1,140, while rents in Orange County increased 2.5 percent to $1,231.
Even with those gains, Southern California rents remained below the Bay Area's still-lofty cost of living.
In the three-county San Francisco metropolitan area, the average rent stood at $1,621, a decrease of nearly 7 percent from 2001. In the Silicon Valley hub of Santa Clara County, a 9 percent decrease left rents at $1,372.
Sacramento, located about 100 miles east of San Francisco, was the only northern California market surveyed by RealFacts to produce higher rents in 2002, largely because prices in the market remain a relative bargain.
The average rent in the Sacramento metropolitan area was $873 in December, an annual increase of just under 4 percent.
California was the only place in the West where apartment rents averaged more than $1,000. The Seattle market was the most expensive outside of California with an average rent of $858, a 0.2 percent decrease from the previous year.
Although Bay Area prices remain the highest in the West, most apartment renters are enjoying major savings from just a couple of years ago.
For instance, the December 2002 average rent in Santa Clara County was 29 percent below the December 2000 average — a savings of $565 per month, or $6,780 annually.
Contributing: The Associated Press; Dave Anderton