Bay Area’s COVID-19 rents plummeted — but not for everyone

Although Bay Area rents fell through the early months of the COVID-19 pandemic, one group benefited less than others — low-income tenants.

The cost of older, cheaper apartments, usually rented by low-wage workers and others on fixed government incomes, dropped far less than newer properties. And in Alameda County, rents for low-cost apartments by May had risen rose above pre-pandemic levels

An analysis of Bay Area apartment prices found any savings gained by moving into an older complex has evaporated in the East Bay, even as luxury properties continue to entice professionals with months of rent-free discounts.

“It’s becoming difficult to keep up,” said Lorena Plancarte, a housekeeper and San Jose resident fighting a rent increase. “As beautiful as it is to live here, I don’t know what the future will bring.”

The economic impact of the resurging COVID-19 pandemic has struck low-income residents harder, and the fiscal pain has been most acute in housing costs, economists and advocates say. Nonprofit advocates have been vigilantly challenging landlords over pandemic tenant protections and bans on certain rent hikes.

Adam Couch, market analyst for real estate services firm RealPage, said increased demand for affordable apartments has driven up the prices of older units. Young workers living with their families have returned to the hunt for apartments and roommates as pandemic restrictions lift. Families struggling with lost income have also sought cheaper housing, adding to the competition for lower-cost apartments.

“There’s demand, really, across the board,” Couch said. Rents began to rise early this year as pandemic restrictions eased and workers returned to cities. “Demand has showed up in a huge way.”

Apartments are generally categorized by classes according to cost: Class A consists of the top 20% most expensive units; Class B encompasses 60% of the less expensive units in the middle of the market, and Class C are units in the lowest 20% available.

Class A properties typically are new or extensively renovated, offering amenities such as large common areas, gyms, pools and modern security. Luxury prices in Bay Area metros range from $3,550 in San Francisco to $3,140 in San Jose to $2,750 in Oakland. Class B and C properties are usually older and offer fewer amenities, with Bay Area prices ranging from $1,950 to $2,235 a month in the lowest category.

The cheapest apartments in the Bay Area had the smallest price declines of any sector between March 2020 and June 2021. In Oakland, Hayward and Berkeley, low-end rents actually increased about 1 percent during the pandemic. Meanwhile, prices for Class B apartments in San Francisco and San Mateo County fell 14%, the biggest discount in the region. At the top of the rental market, the cost of a luxury apartment dropped 12% in Santa Clara County, about 14% in San Francisco and San Mateo County, and nearly 11% in Alameda County, according to RealPage data.

Professionals able to work remotely escaped largely unscathed in the pandemic economy. But workers in the service industry and in other hourly-wage jobs that cannot be done remotely have seen their incomes fall and dipped into savings or tapped family members to make rent.

The Bay Area unemployment rate in June dropped to 5.4%, declining slightly from the prior month but still twice the pre-pandemic levels. Workers in the hospitality and leisure, retail, manufacturing, transportation and warehouse sectors have been among the slowest to recover their jobs, according to an analysis by the Bay Area Council Economic Institute.

The results have shown up in the flood of applications to state and local rental assistance programs. Nonprofit attorneys have stepped into rental disputes to assert new protections for tenants in rent controlled apartments in some cities.

Emergency price gouging protections in California generally prohibit landlords from increasing rent during the pandemic by more than 10%. Bay Area cities have enacted additional tenant protections.

Plancarte, 45, and her family have lived in the same two bedroom, rent-controlled apartment in San Jose for 17 years. She has asked her landlord to fix her kitchen and windows for years, and the property owner finally did the repairs early this year, she said through a translator. Her long-time landlord raised the rent from $1,700 to $1,850 after the work — a surprise to Plancarte and an unexpected new cost.

The Law Foundation of Silicon Valley argued that the increase violates San Jose’s emergency ban on hikes for renters impacted by COVID-19.

Plancarte and her husband, a handyman, have lost work during the health crisis, and cut back on buying groceries so they could pay rent. The entire family, including Plancarte’s three children, caught and suffered through the virus last fall. But, she said, she and her husband have started to find more opportunities for work and “things are starting to look up.”

Instead of finding pandemic discounts, working-class families, punished for years by the region’s high housing costs, are seeing apartment prices climb beyond their budgets.

Kimberly Linares, 55, has struggled to make rent on her disability check and the modest income from her two sons’ part-time work. When her landlord told her rent would increase $200 a month to $1,700, Linares contacted the Law Foundation.  Advocates successfully argued to have the rent increase reduced and are helping Linares and her landlord apply for rental assistance.

Linares considered moving, but knew from the experiences of friends and family another apartment would likely be more expensive.  “I know I wouldn’t be able to afford it,” Linares said through an interpreter. “It’s not an easy thing to live here.”

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