Rents and Risk in Orange County, Part I

Rents and Risk in Orange County, Part I                                                                                       

By: ND

During the last 30 days, the news cycle has been consumed with talk of the Coronavirus and some discussion has focused on the potential impact of Covid-19 might be on the real estate and rental markets.  New numbers from industry researcher Yardi Matrix  actually shows that rent growth was slowing in Orange County prior to the pandemic.

Of the Top 30 metropolitan areas tracked, Orange County ranked 22nd out of 30 in terms of year over year rent growth for March 2020 at 3.5% for workforce/renter by necessity product type.  For reference, this is just below the national average at 3.7% and above Phoenix, Arizona that grew by 8% year over year.  From a supply perspective, it appears the delivery of new units to the marketplace has yet to really make a dent as the market vacancy rate has held steady at 4% year over year.

One new statistic that is of interest during these turbulent times percentage of at risk jobs.  Yardi Matrix has ranked Orange County at 8th out of 30 of the top metros in the US as have the most at-risk jobs.  At risk refers here to service, hospitality, restaurants and retail.  When combined with the Inland Empire, we see these jobs comprising more than 34% of employment sector.  More than 14% of the jobs in Orange County are in the leisure/hospitality space.  The longer these folks are out of work, the greater the stresses placed on the local economy and the subsequent impact it will have on the rental and real estate market.