Apartment Rents, Occupancies Drop in U.S. as Job Losses Mount

By Daniel Taub

Jan. 22 (Bloomberg) -- Apartment rents and occupancy rates declined across the U.S. West and South as the recession cost tenants jobs and forced some to combine households.

The average monthly rent dropped to $993 in the three months ended Dec. 31 from $1,002 in the previous quarter, Novato, California-based RealFacts said in a survey of 60 metropolitan areas. The occupancy rate fell to 92.2 percent from 92.9 percent.

The U.S. lost 524,000 jobs last month, capping the worst year for employment since 1945, the Labor Department said earlier this month. The unemployment rate jumped to 7.2 percent in December, an almost 16-year high. The sagging job market is one reason renters including recent college graduates are signing fewer leases, said RealFacts owner Caroline Latham.

``When the economy is good, those people spin out into households of their own as soon as they possibly can,'' Latham said. ``When the economy is bad, they're all crammed together.''

The Bloomberg Real Estate Investment Trust Apartment Index last year dropped 30 percent, compared with a 41 percent decline for the Bloomberg REIT Index, and a 38 percent slump in the Standard & Poor's 500 Index. The 16-member apartment index includes Chicago-based Equity Residential, the largest U.S. REIT that owns apartments, and Denver-based Apartment Investment & Management Co.

In the RealFacts survey, rents fell the most in Florida's Miami-Fort Lauderdale area, where they averaged $1,188 a month in the fourth quarter, down 2.5 percent from the previous three months and 2.6 percent from a year earlier.

Rents in California's Riverside-San Bernardino area fell 2.4 percent from the previous quarter to $1,129, and in the state's San Jose-Santa Clara area they dropped 2 percent to $1,674.

10,000 Vacant

About 10,000 U.S. apartments were vacant at the end of 2008, RealFacts said. The closely held research company's survey covers an inventory of almost 3.2 million units of rental housing in states including California, Florida, Arizona, Idaho, Nevada and Texas. RealFacts surveys apartment owners on a quarterly basis.

In 2008, 9,248 apartment units were added to the rental- housing supply in the markets RealFacts tracks. That compares with an average of 65,000 units per year in each of the previous 10 years, the company said.

Sales of apartment complexes with more than 100 units dropped to 386, about one-third the level in each of the previous three years, RealFacts said.

``The decline in rents and occupancy is certainly good news for renters,'' the company said in its report. ``For people who have invested in income property, the news is less welcome.''

To contact the reporter on this story: Daniel Taub in Los Angeles at dtaub@bloomberg.net.