If there is one trend that has been a major factor in the housing market, it’s rental prices. Across the country, rent costs on homes have seen to increase significantly, showing little-to-no sign of slowing down. One area that describes this upswing in rentals perfectly, is none other than sunny Southern California.
Analysis of the 2016 trends show the cost of renting rising their fastest in nine years, seeing a 4.7 percent increase in the region’s cost of living. As of October 2016, rental costs in Orange County peaked to $1,781 on average, reaching their highest point since 2007. So what does this all mean for the Orange County housing market? Well, here are a few things to keep in mind about rising rental prices in Orange County, and exactly what they mean:
Rising Costs Due to Increased Hirings and Job Opportunities
Perhaps one of the foremost factors in OC’s rising rent costs can be attributed to local business booms. At the same time that rental costs have hit a 9-year high, the unemployment rate has also plummeted to a 9-year low. Local businesses have seen their customers return, revenues increasing, and have led them to hire more employees.
Although the rent costs have skyrocketed, the reason that people are flocking to Orange County should not be overlooked. With all these added jobs and employment fulfillment, it only points to signs of a stabilizing and expanding local economy.
Holdout for New Apartment Complexes
As contractors and homebuilders started seeing the demand for renting and buying properties increase in the beginning of 2016, it prompted more projects to be put in the plans. This was already seen in the massive increase in new homes built throughout 2016, making Irvine and Lake Forest among the nation’s fastest-growing cities, and will continue to increase throughout the year.
Although we can’t definitively say that rising rental prices in Orange County will decrease as a result, but it’s a good chance. With more availability comes more options, and with more options comes the hope of more competitive pricing for renters.
Uptick in Number of People Looking to Rent
This one is more of an obvious and likely insight. As employment levels increased, so did the number of people coming to the city, which prompted an influx of renters who were unsure of whether their jobs would be consistent. However, as these people settle into their new positions, and those who were laid off become channeled outwards, it works towards decreasing the number of renters in OC.
What’s more important than the downward pressure on rental prices, however, is that of the impact on the housing market as a whole. With newcomers becoming more stabilized in their new communities and roles, it opens an opportunity for them to make the transition into homebuyers in the near future; which leads us to our next point.
More Renter Turning into Buyers
In the grand scheme of things, we see the influx of renters in Orange County to be a positive thing. With cost of renting steadily increasing, and rental properties growing scarce, it has a dual-effect on the overall local housing market.
At some point, many of those who are looking to rent as a means of transitioning into Orange County, will find it more beneficial to outright purchase a home. Since renting becomes so expensive, renters will start to consider becoming homebuyers, leading to an overall growth of the housing market in OC.
Conclusion
The rising rental prices in Orange County have left many people in a state of stress and concern, as costs continue to steadily increase. However, as outlined above, we can find peace of mind in focusing on the bigger picture, as opposed to the short-term benefits. Although it may be some time before we see the aforementioned changes come to fruition, the stability at which it’s growing could prove beneficial for renters and buyers in the long-run.