“In Walnut Creek, we haven’t seen the big rent increases that we’ve seen in other areas,” says David Fiore of Mill Creek Residential. “There’s some room for growth.”

Apartments remain the darling for Bay Area housing development, but condo conversions and new construction are poised to make a comeback.

Sticker-shock-inducing rental rates — such as $4,000 for a one-bedroom — in San Francisco have made outlying areas such as the Peninsula and the Interstate 680 corridor more attractive for renters and developers.

About 2,500 apartments are expected to hit the San Francisco market in 2013 with hundreds more under construction in cities such as Redwood City, Foster City, Dublin, Emeryville and Berkeley.

Next year, developers in Walnut Creek plan to break ground on numerous apartment projects such as Mill Creek Residential’s 126 units at 1960 North Main St. and Laconia Development’s 141 units at 1500 N. California Blvd.

“In Walnut Creek, we haven’t seen the big rent increases that we’ve seen in other areas,” said David Fiore of Mill Creek. “There’s some room for growth.”

Mill Creek recently broke ground on the 105-unit Mission Piers in San Francisco’s Dogpatch neighborhood, which will probably start leasing in the first half of 2014, and Walnut Creek will finish in late 2014. Like many developers, Mill Creek projects rents to keep growing or at least remain steady by the time units hit the market, Fiore said.

Soaring apartment rents are also making buying a more palatable alternative. New for-sale housing, whether condo or single-family, is finally on the upswing. Homebuilders with units ready and on the market have seen brisk sales at their developments, and many say they can’t find enough development sites in the core Bay Area. It’s a function not so much of a booming economy but the result of a lack of inventory across the board.

J.K. Dineen covers real estate for the San Francisco Business Times.

Article source: http://www.bizjournals.com/sanfrancisco/print-edition/2013/01/04/residential-real-estate-balance.html

The average monthly price of an apartment lease has risen to $2,734 — up 12.9 percent since 2011 — according to data compiled by the rental data firm Real Facts. The spike in San Francisco rents seems to be spilling over to cheaper markets like Oakland, where the average rent is now $1,835 — up 14.4 percent since last year. Pacifica, where rents now average $1,908, has experienced a 15.6 percent increase.

“Outlying areas are starting to benefit from the improvement of Silicon Valley and San Francisco,” said Nick Grotjahn of Real Facts. “But you can still go right across the Bay and to Oakland and pay almost $1,000 less per month.”

At a forum Tuesday sponsored by the San Francisco Planning and Urban Research Association think tank, housing developers were asked whether The City is experiencing a “rent bubble.” Their answers didn’t break down along clear yes-or-no lines.

“Not quite yet,” said Meg Spriggs, a senior development director with the developer AvalonBay, which is seeking to put more than 250 new apartments on Ninth Street near the new Twitter headquarters. “But I think we’ll start to see rents taper a bit. Sixteen percent growth is not sustainable, but I think there’s still room for growth.”

Rental prices have surged following a new influx of young, high-earning workers who don’t necessarily want to be tied down to one place, but who also haven’t yet amassed enough money to make a down payment for San Francisco’s average home price of $725,000.

A recent survey by Realtor.com shows that The City’s median listing price is up 15.4 percent since last year, which matches a similar upward tick in Oakland, where the average home is selling for $379,000. The number of homes for sale in San Francisco is down 40 percent since last year, and nearly 60 percent in Oakland.

And where apartment owners in the mid-2000s fought to convert their units to condominiums so they could be sold, the popular move in today’s market is to build what could be considered condos and instead rent them as apartments.

“It’s the reverse trend now,” Grotjahn said.

Even with rising rents, the disparity between who can only afford to rent and who can buy in San Francisco remains large, said Kevin Kearney, a Coldwell Banker real estate agent who works throughout the Bay Area. He said even though high-earning young tech workers might not be able to afford homes just yet, in some cases their parents can.

“With the rising rents, we’re definitely seeing some people get off the fence,” Kearney said. “But still, a lot more people can afford to pay rent on a monthly basis — even if it’s higher than a mortgage payment — than those who can come up with a down payment. So we’re seeing more and more of those down payments from parents.”

dschreiber@sfexaminer.com

Median home price increases in Bay Area

• San Francisco: Up 15.4 percent to $725,000 since last year
• Oakland: Up 14.8 percent to $379,000 since last year
• San Jose: Up 12 percent to $549,000 since last year

Source: Realtor.com

Monthly apartment rent increases in Bay Area

Article source: http://www.sfexaminer.com/local/2012/07/san-francisco-housing-market-booms-bigger-ever