OC’s largest cities among priciest rental markets in U.S.

Anaheim, Irvine, Santa Ana see big hikes, rank near Boston, San Francisco

(iStock/Illustration by Kevin Cifuentes for The Real Deal)
(iStock/Illustration by Kevin Cifuentes for The Real Deal)

Several years ago residents of the Rancho La Paz mobile home park, a well-kept, age-restricted community in Orange County, were paying as little as $650 in monthly rent. By last year, after an ownership change and repeated hikes, some had to fork over nearly $1,600 — and were reportedly relying on donations of food to survive.

Those dramatic rent increases prompted an unusual state law, effective this year, that applied protections only to Rancho La Paz, a quirk that owes to its location straddling two different municipalities, Anaheim and Fullerton. The case goes beyond a quirk, though, illustrating how the red-hot housing market across Orange County that’s helped vault cities such as Irvine, Anaheim and oft-dismissed Santa Ana into the ranks of the most expensive in the nation for renters.

“You’ve got so many renters that want to rent in Orange County,” said Mark Bridge, an Irvine-based managing director of multifamily sales at Cushman & Wakefield. Along with a chasm between the area’s high demand and available inventory, Bridge cited more recent price hikes that had effectively been delayed for months.

“People didn’t really raise their rents because of Covid, and then in 2021 everyone tried to catch up,” Bridges said.

It’s not that Orange County was just discovered: The county, with a population of 3 million directly to the south of Los Angeles, has long been home to some of the country’s choicest real estate, with beachside enclaves like Laguna Beach and Laguna Niguel attracting the likes of everyone from Warren Buffett to the Chinese government. In one report published last fall, Newport Beach, with 85,000 residents, claimed six of the country’s 100 most expensive zip codes.

But those spots are on the coast, and the county’s wealthiest residents, of course, typically don’t rent apartments — they buy mansions.

More recently, it’s been the county’s larger, inland cities that have experienced eye-popping price hikes, including for apartment rentals.

In one analysis, published last month by the website Rent.com, Los Angeles apartment prices saw relatively little movement over the previous year, with one-bedroom rents coasting up seven percent and two-bedroom prices ticking down slightly. (The study used a weighted formula to compare third quarter 2021 rents in cities across the country to third quarter 2020 rents.)

And in notoriously expensive San Francisco, rents actually got cheaper, with one-bedroom prices falling seven percent and two-bedrooms falling 11 percent. San Jose prices were basically flat.

Orange County saw major hikes.

In Anaheim — 30 miles from Downtown L.A. but a decent-size city in its own right, with more residents than Cincinnati or St. Louis, a major league baseball team and Disneyland drawing millions of visitors from around the world each year — one-bedroom rents shot up by 34 percent, to just under $3,300 in late 2021. That price was a few bucks higher than the comparable figure for L.A., and only $113 lower than in San Francisco. Two-bedrooms in Anaheim also soared.

The trend flies in the face of some long-held perceptions about Santa Ana, the county’s second largest city, with a population of about 330,00, and a reputation as a cheaper area with a lot of blue-collar workers and household incomes below the state average. Yet the city saw two-bedroom prices rise by 29 percent, to nearly $3,700–perhaps reflecting its large Latino-American population, a segment that tends to have more members to household than average, according to data from the U.S. Census Bureau.

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The trend aligns with common expectations in affluent Irvine, the home of a vibrant business district, a public research university, and the master-planned communities developed by the Irvine Company over the course of decades. Rents for one-bedroom apartments in Irvine shot up by more than a third, to over $3,500, a price that ranked among the country’s most expensive markets, below Boston but higher than San Francisco.

The OC rent hikes, which counted as among the steepest in the country, can partly be explained by a spillover effect. The county’s single family housing market has also been off the charts — even hotter than L.A. — with a majority of home sales coming after bidding wars.

“It’s insane,” said the appraiser Jonathan Miller of the OC housing market.

And that hot housing market also extends to the inland cities, not just the coastal enclaves. One report published by RealtyHop this month calculated a $660,000 average December list price for Santa Ana, ranking that city among the country’s top 20 priciest housing markets (and more expensive than Washington, D.C.).
Anaheim ranked ninth, with a $750,000 average listing. Irvine, at $998,000, ranked third.

Those soaring home prices, of course, also keep many buyers out, adding to the renter pool and leading to higher demand for apartments. Some of them end up paying high prices for new construction: Bridge cites a surfeit of development around Angel Stadium, in particular. (The area has also seen an influx of plans for workforce housing construction.)

The OC hikes can also be seen as part of an even broader trend, where suburban areas around the country have experienced dramatic price increases: In the Rent.com apartment price analysis, the biggest rent spikes, by and large, were seen not in major cities but outside them, in places such as Douglas, Ariz. (Phoenix), Aurora, Colo. (Denver) and Henderson, Nevada (Las Vegas).

A similar phenomenon has long been underway in California, where the exceptionally high housing prices of major cities, including Los Angeles, have steered many residents farther out, leading to more widespread price increases.

“You’re not just looking at Los Angeles or the Bay Area — people are moving to Riverside, to Sacramento, to Stockton,” Shane Lee, an analyst with RealtyHop, said last fall. “Generally speaking, all these places are becoming less and less affordable.”

And compared to its heavily congested neighbor to the north, Orange County, added Bridge, can look particularly attractive.

“I’ve been to L.A. a lot,” he said. “[Orange County’s] just cleaner, nicer, better.”

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