Bay Area rents: still rising, but starting to level off

Bay Area apartment rents continued to climb in the second quarter of 2016, but increases are starting to level off and double-digit hikes look like a thing of the past.

Despite that, the region remains confoundingly expensive for renters.

The average apartment rent in the nine county region is now $2,526, according to a new report from Novato-based RealFacts. That’s up 4.3 percent from the year before, a hefty enough boost. But renters, take solace: it’s a far cry from the 7.1 percent year-over-year increase reported in the first quarter and the 10 percent hike posted in the final quarter of 2015.

“Rents have gotten so high that they are slowing in the highest-demand areas,” said Sarah Bridge of RealFacts. “The market is at equilibrium and right now strikes a perfect balance between supply and demand. It’s not runaway rent growth, but it’s stable and appreciating at a respectable pace. And it seems to be meeting the demand of the renters and the investors.”

Across the region, occupancy rates stand at around 95 percent, though “some landlords are taking a little longer to fill apartments,” said Jeffrey M. Mishkin, regional manager at the San Francisco office of Marcus and Millichap, a real estate brokerage firm. “They’re still getting the good rents, but we’ve had this flattening (of increases) for a while now. If this turns out to be a soft landing for the market, that would be marvelous. Hopefully, it gives people a little bit of relief.”

Perhaps.

The average apartment in San Jose now rents for $2,503 — up 4.0 percent from the second quarter of last year, though that’s less than half of the 8.6 percent increase reported in the first quarter.

Among the region’s major cities, Oakland is where landlords pushed rents up the most: by 5.4 percent year over year, according to the report. But again, that was down from the 7.2 percent and 13.7 percent increases, respectively, in the previous two quarters.

An average Oakland apartment now rents for $2,959 — a serious challenge for the typical income earner who easily can spend half of his or her pretax wages on rent.

“There’s a sense of feeling trapped” by the cost of renting here, said Lena Chervin, a freelance environmental consultant who grew up in Berkeley and spent much of the past four years moving from one East Bay sublet to another. She roomed in a house with a revolving cast of troubled tenants and lived in a basement, improvising a kitchen by plugging hot plate, crock pot, mini-fridge, electric kettle and rice cooker into a surge strip.

She now rents a room in Oakland for $750 and called her current situation “a miracle. I can’t really run away from this housing problem — it’s happening in any desirable city. So you might as well come to terms with the hassles that you know.”

 Bay Area rents: still rising, but starting to level off

Looking for something affordable, a significant number of renters are moving east to Contra Costa County, increasing competition and pushing rents up. In Concord, the average apartment rent rose 8.3 percent from the year before to $1,760. But that’s less than half the cost of renting in San Francisco, which remains the region’s most expensive market at $3,595.

Because RealFacts reports on complexes with 50 or more units, smaller and at times more moderately priced complexes, duplexes and houses rented by mom-and-pop landlords are not factored into its data.

By county, according to RealFacts, first-quarter rents were up 2.7 percent year over year in Santa Clara County, where the average apartment rents for $2,654; 4.9 percent in San Mateo County ($2,912), 5.5 percent in Alameda County ($2,321) and 8.2 percent in Contra Costa County ($1,952).

RealFacts found that an average one-bedroom, one-bath apartment rents for $2,672 in Mountain View, $2,663 in Oakland, $2,258 in San Jose and $2,218 in Pleasanton. Stepping up to two bedrooms and two baths is a steep jump. In Mountain View, for example, the average two-bedroom, two-bath is $3,609.

Those kinds of prices are out of the question for Chervin, who has a degree in environmental toxicology from UC Davis and has socked some money away, working as a consultant. She has entered a teaching credential program at California State East Bay and hopes to become a high school science teacher — and perhaps some day rent her own apartment.

For the time being, she has been relegated to the real estate underground, renting rooms from friends, and friends of friends.

“The question I ask myself is, ‘Why?’ ” she said. “Why have I been subjecting myself to this? I feel a lot of resentment that it’s so hard to live in the place where I grew up. It’s weird, because you feel resentment toward the culture of the Bay Area, what it’s becoming. But at the same time — I feel so deeply rooted in this community.

“I’m not planning on moving,” she said. “I’m trying to stay here as long as I can.”

Contact Richard Scheinin at 408-920-5069, read his stories at www.mercurynews.com/richard-scheinin and follow him at Twitter.com/RealEstateRag.

Article source: http://www.mercurynews.com/business/ci_30154810/bay-area-rents-still-rising-but-starting-level

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