Real Estate

Modesto rents flat against rising trend

It's a good time to be a renter in Modesto.

While apartment rents elsewhere in California keep rising, they remain flat in Modesto, according to statistics released today by the research firm RealFacts.

The average apartment rented for just $808 a month in Modesto in April, May and June. That's about the same price paid throughout 2006.

For a real rental bargain, go to Merced, where the average is just $708 a month. That makes it the cheapest place in California to rent, at least among the 173 cities tracked by RealFacts.

When the Northern San Joaquin Valley housing market was booming, investors jumped in to buy homes they planned to resell, or flip, at higher prices or to use as rentals. As the market cooled, it became inundated with rental units, and that has helped hold down rents.

But California's average apartment rent has risen to $1,389 a month, a one-year increase of 5.9 percent.

And in Manteca, where large luxury apartment complexes have been built, rents also have been jumping. The average there is $946, up 10.9 percent.

The biggest price shocks occurred in the Silicon Valley hub of Santa Clara County, where apartment rents climbed 11 percent to an average of $1,569 per month, RealFacts said.

Other apartment markets with significant rent increases included: Portland, Ore., up 7.2 percent to $820; Ventura County, up 7.2 percent to $1,542; Los Angeles and Orange counties, up 6.8 percent to $1,607; and San Diego County, up 5.5 percent to $1,345.

The high-tech industry's comeback from the dot-com bust of 2000 and 2001 is spawning more jobs, creating more demand for places to live in Silicon Valley, Seattle and San Francisco. Payrolls also are expanding in many other sectors.

Many people appear to be leasing apartments instead of trying to buy homes with housing sales sagging badly in most parts of the West, according to RealFacts.

Sales have been bogging down during the past two years as home prices have declined, causing more prospective buyers to stay on the sidelines in hopes of getting a better deal. The slowdown also reflects greater difficulty in getting mortgages as interest rates rise and lenders tighten their qualifying standards.

All those factors have helped fuel higher apartment rents in most of the West, RealFacts spokesman Chris Bates said.

The metro market defined by Los Angeles and Orange counties demanded the highest apartment rents in the markets studied by RealFacts.

In Santa Monica's Irvine Apartment Communities, penthouses rent for $18,000 a month. That's $216,000 a year in rent.

"Not only do these penthouses feature beautiful views of the Pacific, but they include three bedrooms and three baths plus an enviable location in easy walking distance of downtown Santa Monica's trendy shops and restaurants," said Caroline Latham, chief executive officer for RealFacts.

The least expensive rents were in the Tucson, Ariz., market at an average of $658 a month.

Colorado Springs, Colo., was the only major market where apartment rents declined during the past year. Apartment rents there dipped 1.1 percent to $701 in June.

The Associated Press contributed to this report.