Apartment rents drop in U.S. West, South

Apartment rents in the U.S. West and South dropped 1.5%, marking their third consecutive decline, as higher unemployment forced some renters to combine households.

The average monthly rent dropped to $978 in the three months ended March 31 from $993 in the fourth quarter of 2008, data tracker RealFacts said in a survey of more than 12,500 apartment complexes. The average rent was $993 in the year-earlier quarter as well.

The occupancy rate also fell for the third straight quarter, slumping to 91.4% from 92.2% in the fourth quarter and 92.6% a year earlier.

Higher unemployment is a primary reason for the declines, said Caroline Latham, owner of RealFacts, which is based in Novato, Calif.

A rising jobless rate “usually means a reduction in demand for apartments,” Latham said. “If they’re young singles, they band together and share an apartment or they go back and live with their parents.”

A Bloomberg index of the stocks of 13 real estate investment trusts that own apartments has fallen 23% this year, compared with a 7.2% decline in the Standard & Poor’s 500 index.

In the RealFacts survey, among 31 metropolitan areas tracked, rents fell the most in California’s San Jose, Sunnyvale and Santa Clara region, where they averaged $1,612 a month in the first quarter, down 3.7% from the previous three months and 2.9% from a year earlier.

Rents in Washington’s Seattle, Tacoma and Bellevue area fell 3.4% from the previous quarter to $1,067, and in the Oxnard, Thousand Oaks and Ventura area of Southern California, they dropped 2.8% to $1,473.