A surge of tech hiring and the aftereffects of the housing crash are filling up apartments in Silicon Valley and pushing renters toward the East Bay, where rents also are rising and vacancies dropping, according to a new housing report.

Natalie Gonzales has been looking for an apartment or home to rent in the East Bay for six months, and she’s ready to give up and stay put in Pacifica.

“I feel like it’s impossible to find a decent place for a good price,” she said.

Three factors have converged to make apartment hunting a misery in the Bay Area, experts say: the resurgence of tech hiring that has brought more people to Silicon Valley; potential homeowners still uncertain how far prices will drop continuing to rent; and the release of pent-up demand from young adults moving to their own digs after living with family or roommates during the downturn.

“All three have all happened almost simultaneously during the last 18 months,” said Hessam Nadji, managing director for research at Marcus Millichap, a commercial real estate brokerage with offices around the Bay Area.

The company expects vacancies in Silicon Valley this year to drop below 3 percent, a level not seen since the dot-com boom. Rents will hit $1,522 per month, a more than 7 percent increase from 2011. For San Francisco and the Peninsula, the company forecasts a 7.2 percent increase to $1,947 a month.

East Bay-bound

The

tight Silicon Valley rental market is expected to push more apartment hunters to the East Bay, where rents could rise to $1,361 a month, an increase of 3.8 percent this year, on the heels of a nearly 3 percent increase last year, the company said. East Bay vacancies are expected to drop to about 3.2 percent this year. Marcus Millichap’s forecast is for the entire apartment market for 20 units and above.

“Most of the time everything’s just too expensive,” said Jamie Atkinson, an administrative assistant at an upscale Peninsula grocery store who has searched for a new apartment on the Peninsula and in Hayward, Alameda and South San Francisco. “Big complexes, little complexes, everything — they have gone to outrageous prices.”

The low number of vacancies in large apartment complexes has made the San Jose area the best place in the U.S. for new developments, the company said.

“We’ve had many, many months of increasing employment,” said Steven Seligman of Marcus Millichap in Palo Alto. “There are going to be some apartments coming on line, particularly in San Jose, but in general there hasn’t been lot of construction over the last few years and rents had significant increases in 2011, and most are predicting increases in 2012.”

That’s put pressure on tech workers looking for apartments in complexes that have all the amenities.

Kimberley McInnis, a systems engineer with a startup, was faced with a rent increase and found a place in one weekend of intensive searching — $1,765 a month for a small one-bedroom in a better complex in Sunnyvale. “Rents are ridiculous,” she said.

Aditya Shukla, a project manager at Hewlett-Packard (HPQ), said that three weeks of searching for a new place in Cupertino or Sunnyvale has convinced him that rents are up 10 to 15 percent from last year. “I was able to find multiple apartments,” he said, possibly because he’s looking for a two-bedroom. But they were for high monthly rates with large deposits and “no negotiation — you have to put down this much, then move in if you want.”

New projects

Apartment developers are racing to complete projects, including Crescent Village, a 1,750-unit Irvine Co. development in north San Jose. The first phase with 380 units just opened, with 1,000 to be completed by the end of the year. The units go for $1,750 to $2,950 a month.

“There are all these jobs coming into the market, but there’s been very little construction over the last three or four years,” said Kevin Baldridge, Irvine Co. executive vice president for apartment communities. “We’ve been in an undersupplied environment for the last two to three years. That will begin changing.”

Irvine Co. already has signed 32 leases and had 200 visitors since the first units at Crescent Village opened April 2.

Adding to the rental pressure are foreclosed homeowners looking for places to live. After bailing on a $6,000 monthly mortgage, a $2,000-a-month rental looks affordable to a foreclosed homeowner, said Ron Stern of BayRentals.com, a Bay Area referral service.

Rents are more affordable for smaller units such as duplexes and fourplexes, Stern said. “There’s pretty good supply and rents are reasonable, especially in the smaller units that don’t have all the pools and rec rooms. You can definitely get better deals on them.” But Stern said he thinks rents will rise toward the middle of the year.

Contact Pete Carey at 408-920-5419.

Article source: http://www.montereyherald.com/business/ci_20410464/bay-area-rent-renters-expensive-squeeze-tight-market