In the Star today there was an article that average rent prices have come down for apartments to 2003 levels. At the same time city officials are worried as there are not enough new units around.
Wouldn't the free market dicate that low prices equal low supply? And that for supply to increase, price needs to increase? So, is the city going to provide subsidies for developers? Or allow prices to increase, therefore providing an incentive to build more?
Maybe we should ask what would Reagan do?
Apartment rents fall, as does supply
Three-bedroom units buck trend
By Teresa Rochester, trochester@VenturaCountyStar.com
December 17, 2005
The average rent for one- and two-bedroom apartments in Simi Valley fell below 2003 levels this year, according to a city-conducted survey.
At the same time, the vacancy rate in the city dropped to 1.83 percent, the survey found.
"It's a strange phenomenon," Senior Planner Shannon Nash said. "I suspect the vacancy rate dropped because the rents dropped."
For a while, several apartment complexes were offering move-in specials for one- and two-bedroom units to lure residents turned off by the previously high rents, which skyrocketed as the market got tighter.
As of Nov. 1, 2005, the average rent for a one-bedroom, one-bath apartment was $1,039, or 11.7 percent less than last year's average rent of $1,176. The prices are expected to level out in coming months.
Despite the good news for those hunting for one- and two-bedroom apartments, the price of three-bedroom units increased.
The biggest increase was seen among three-bedroom, three-bath apartments. They jumped by 11.5 percent over 2004 rents. The average rent this year was $1,450 a month, while last year the same apartments rented for an average $1,300 a month.
Shari Rosen, the executive director of the Apartment Association of the San Fernando Valley/Ventura County, said the continued price growth for three-bedroom units was not surprising.
"I can understand that," Rosen said, "especially with the housing market the way it is. It's way out of sight for most people."
Families priced out of the housing market would hunt for three-bedroom apartments, putting them at a premium, Rosen said.
Simi Valley officials send the survey to each apartment complex in the city, and 97 percent of the surveys were returned.
Of the 3,585 units represented in the survey that were not earmarked for senior citizens or occupied by owners, 589 of them were considered affordable.
One of the purposes of the survey is to see if the city is hitting its target for affordable housing and rental housing.
"We can tell that by the vacancy rate we still don't have enough," said Rob Bruce, the city's deputy director of housing and special projects. "It will probably take us a few more years to make a difference."
Councilman Steve Sojka, who serves on Simi Valley's Affordable Housing Committee, which reviewed the report this week, said the numbers serve as a cautionary tale in light of recent requests by several owners to convert their apartment units into condominiums.
And new apartment projects, such as the 500 luxury units under construction behind the Simi Valley Town Center, are a drop in the bucket.
"It's telling me even with the new apartments coming on line, it's still in crisis mode, with the demand outweighing the supply," Sojka said. "We have to pull teeth to get apartment buildings in this town."