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Bay Area Rally Sends Rents Soaring

Thu, 01 Aug 2013 16:09:56 +0000

JIM CARLTON
CONNECT

SAN FRANCISCO—When Alexandra Goldman got notice of her rent increase—from $6,000 a month on a five-bedroom house she shared with roommates to $11,000—she says she was in disbelief.

“We knew immediately we were not going to be able to pay that much money to live there,” said Ms. Goldman, a 28-year-old planning consultant whose share of the rent was about $1,000 a month. After receiving the notice in October, she said the house’s occupants ended up dispersing to other rentals. She is living with other roommates now and paying about $300 more than she had before. Her former landlord didn’t immediately respond to requests for comment.

Welcome to what is arguably one of the worst cities in America to be a renter, but among the best to be a landlord and apartment investor. San Francisco led the top-50 U.S. metropolitan areas in average rent growth during the second quarter, jumping 7.8% to $2,498, while Oakland was No. 2 at a 6.9% increase, and San Jose was in fifth place at 5%. The 6.8% increase for the combined San Francisco Bay area was more than double the nation’s 3.1% increase, according to preliminary estimates by MPF Research, a market-research firm in Carrollton, Texas.

The Bay Area’s Building Boom

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Jason Henry for The Wall Street Journal

An advertisement for the new 22-story apartment complex at 1190 Mission Street, seen from Market Street in San Francisco

Housing Starts Fall by 9.9% in June

The rent increases have investors rushing to purchase existing properties. San Francisco-based Ridge Capital Investors, for example, has acquired nearly 500 units throughout the area since 2011, including a 45-unit apartment complex in San Mateo, a city south of San Francisco, for $10.95 million in November. Trevor Wilson, managing director of Ridge Capital, said his company has competed against as many as 30 bidders on multifamily properties in recent months.

“We’ve been trying to find more [properties], but there’s not a lot available,” said Mr. Wilson, who added his firm is spending about $1.5 million to refurbish units at the 34-year-old Mariner’s West Apartments in San Mateo so rents now well below market levels can be raised. Tenants there are now paying as much as $1,000 below the market rate of $2,300 to $2,400 a month for that area, Mr. Wilson said.

Fueling the rental increases in San Francisco and many other cities across the country are a resurgence in two key industries—technology and energy—and a generally improving economy nationwide, said Ryan Severino, senior economist at Reis Inc., a market-research firm in New York. Rents in energy-rich Denver jumped 6.1% from a year ago, according to MPF Research, while Seattle, another tech hub, saw rents increase 6%.

Mr. Severino said rents are rising the fastest in cities with the tightest supply of housing, like the Bay Area and Seattle. San Francisco’s vacancy rate for multifamily housing in the second quarter stood at 3%, the same as a year earlier, compared with a national average of 4.7%, according to MPF.

Some cities with less-robust job markets enjoyed a strengthened market but remained at higher vacancy rates amid deeper housing inventories. Philadelphia’s vacancy rate dropped to 5.4% in the second quarter, from 6.1% a year earlier and compared with a national average of 4.7%. The rate in Las Vegas fell to 7.5% from 8.4%, and in Memphis, Tenn., to 8.9% from 10.1%, according to MPF Research.

For the nation’s tightest apartment markets, some observers worry the local labor pool may eventually go down, because of people being driven away. In Ms. Goldman’s case, she said she and her roommates mostly had the means to remain in San Francisco but said that may not be the case for everyone. “It’s getting a little out of control,” she said.

Regarded by industry analysts as chronically underhoused, San Francisco added 31,000 jobs in 2012 in a city of about 800,000. That is resulting in sticker shock for new arrivals. Leena Rao, with her husband, Suneel Gupta, recently leased a two-bedroom, two-bath home for between $4,000 and $5,000 a month, compared with $2,150 for the two-bedroom they left behind in Chicago.

“It was a brutal surprise,” said Ms. Rao, 31, an editor for a technology news website.

The tight supplies have unleashed a torrent of new construction in the Bay Area, with 14,377 units permitted for construction over the next 18 months, or almost as much as for Houston, typically a much more active building market, according to MPF Research. In San Francisco, the 22-story 1190 Mission at Trinity Place building preleased half its 419 units before opening July 1, with all the tenants signing agreements without the customary practice of having toured a model or attended an apartment tour, said Rob Willis, director of operations for Trinity Management Services, the builder. “We have never seen this,” Mr. Willis said.

Some homeowners are seeking to cash in on the demand. Jane Shepard said she and her husband, Avrum, plan to rent their four-bedroom, two-bath home in San Francisco to help raise money for needed repairs. “Financially, it’s a great time to be a landlord,” said Ms. Shepard, 67, a commercial-property manager. She said the couple would move to their second home in Visalia, Calif.

But renters with less means are finding fewer options. Dawn Griffin, 55, said she was served with an eviction notice in January on her $725-a-month apartment near the city’s Golden Gate Park. Landlord Elba Borgen, who didn’t return calls for comment, also served eviction notices on the other seven tenants in the building, said Ted Gullicksen, executive director of the San Francisco Tenants Union, which has offered advice and other help to Ms. Griffin and other tenants in her building.

“I can’t afford to move,” said Ms. Griffin, a 30-year resident of the apartment and a medical-office administrator.

Still, some tenants have turned the situation into opportunity. Sam Parr said he ended up starting a business matching roommates with apartments after moving to San Francisco from Nashville, Tenn., last year and seeing prices so high he needed to share rent with someone, too. “I thought, oh my God, this is awful—something has to be done,” said Mr. Parr, 24, who sold the business to a larger startup and now shares a $3,500-a-month house with three roommates.

Write to Jim Carlton at jim.carlton@wsj.com

A version of this article appeared July 16, 2013, on page C1 in the U.S. edition of The Wall Street Journal, with the headline: Bay Area Rally Sends Rents Soaring.

Article source: http://online.wsj.com/article/SB10001424127887324694904578602013087282582.html

The Best Bay Area Neighborhoods for Singles

Thu, 14 Feb 2013 11:27:03 +0000

Trulia

Are you without a “ring on it” this Valentine’s Day? If so, it might not be because this city is notoriously difficult to date in or because of your 4chan habits. It might be that you’re in the wrong neighborhood.

Real estate company Trulia recently crunched some numbers on the best places to find love in major metropolitan areas, including the Bay Area, and the results may surprise you.

If you’re a single lady searching for a single fella, the highest ratio of men to women is in the Tenderloin (94102), and if you’re a single fella looking for a lady, you should head to the Marina (94123).

Trulia came to this conclusion by filtering out gays, people over 65, and people with roommates, which leaves about seven people, by our estimations. If straight ladies aren’t wild about trolling for tang in the ‘loin, (and really, we think that men there probably don’t have roommates because of the proliferation of SROs and such, and not because they’re making hella scrilla) then they should head on over to SOMA, which also has a high concentration of single dudes, busily churning out start-ups and sighing into their lattes, we imagine. Unsurprisingly for both the Marina and SOMA, the neighborhoods with the highest concentration of straight, single people with no roommates is in more upscale areas.

Also, would you look at the blinding pink mecca that is Marin? Yeesh. It’s time to make a trip up north for some artisinal cheese, if you know what we mean (and we think you do: Cheese is delicious). Likewise, women should head way south on the peninsula to get the bluest of blue ball action (nice baby color-coding, Trulia). We suppose it’s called “Man Jose” for a reason.

Also notable is that nine of the 10 U.S. metros with the highest ratio of women to men are on the east coast, except for one: Oakland. (East Bay represent!)

Now that you’ve got your V-Day pub crawl route planned, why don’t you check out our other Valentine’s Day coverage?

Follow @annapulley on Twitter. She’ll tweet you right.

Article source: http://blogs.sfweekly.com/exhibitionist/2013/02/the_best_sf_neighborhoods_for.php

S.F. supervisors back micro-apartments

Fri, 23 Nov 2012 15:23:14 +0000

The San Francisco Board of Supervisors voted Tuesday to give pint-size apartments a try, approving legislation that would allow for the construction of hundreds of 220-square-foot residential units.

Up to two people will be allowed to live in the micro-apartments, which legislation sponsor Supervisor Scott Wiener said would help those who want to live alone but can’t afford most of the studio apartments on the market.

“To confront San Francisco’s rising housing affordability crisis, we must be creative and flexible,” Wiener said in a statement. “Allowing the construction of these units is one tool to alleviate the pressure that is making vacancies scarce and driving rental prices out of the reach of many who wish to live here.”

But for the legislation to pass, Wiener had to agree to cap the number of micro-apartments at 375. Under the legislation, the City Planning Department will analyze the effects of the new units once 325 of them are built.

“Family-sized housing is important and its development should be encouraged,” Wiener said. “But many – including seniors, students and transition age youth – do not need as much space or cannot afford it. These units will be a viable alternative for those who don’t want to live with roommates.”

The SoMa neighborhood and other densely populated city locations would be the likely location for the new units, which include a living room, kitchen and bathroom. Supervisor Jane Kim, who represents SoMa, said that neighborhood’s population could increase by 32 percent as a result of unlimited micro-apartments.

The cap seemed to satisfy skeptics who say that micro-units are not the solution to the city’s housing problem. Supervisor David Campos, who supported the measure, said he visited one of the proposed units and was struck by how expensive rent would be for such a small space.

Concern about rents

The micro-units are estimated to go for $1,300 to $1,500 a month. The average studio apartment in San Francisco rents at $2,075 a month, according to real estate service RealFacts.

“It’s not a lot of space for $1,500,” Campos said, adding that he was concerned it could raise rents across the city. “If 220 square feet is going to rent for $1,500, what does that do for the rest of the places in San Francisco?”

Supervisor John Avalos was the lone vote against the proposal, arguing that the city should be more focused on keeping families from moving.

“This doesn’t make a lot of sense for the San Francisco I know,” he said.

Mayor Ed Lee, who still must sign the measure, told reporters after his monthly question-time session before the board that he hadn’t taken a position on micro-apartments yet.

“I’m always concerned whenever people are changing the standards, but I do think there might be good policy reasons,” he said.

When the Planning Commission reluctantly approved a cap on the number of units last week, some commissioners worried that limitations would confuse developers. But tenant and affordable housing advocates said the cap was crucial to their support.

“We still have concerns, but this way, the impact would be softened if those problems came to fruition,” said Sara Shortt, executive director of the Housing Rights Committee of San Francisco.

Looking at tenants

Ted Gullickson, director of the San Francisco Tenants Union, said he hoped the Planning Department study conducted before the cap is reached would shed light on who is moving into the units.

“If they become urban crash pads for high-tech employees, then we fear they could have a gentrifying effect on the neighborhoods as they get built,” he said. “We do have a strong need for family-size housing as well as affordable housing, and we have limited development sites in San Francisco.”

Neal J. Riley is a San Francisco staff writer. E-mail: nriley@sfchronicle.com Twitter: @realdealneal

Article source: http://www.sfgate.com/bayarea/article/S-F-supervisors-back-micro-apartments-4055493.php

SF’s most popular neighborhoods fetch dear rent indeed

Thu, 27 Sep 2012 11:57:40 +0000

Last week, On the Block’s Jenny Pisillo asked if it isn’t cheaper these days to buy in the Bay Area than rent. Today, we revisit the topic. More proof that the rental market in SF is crazy? Trulia’s Rent Monitor report offers plenty.

First, a smattering of available rentals in popular SF neighborhoods.

Lower Pac Heights

How about this: a 1 bed, 1 bath apartment on Gough in the lower Pac Heights area for $3,100 a month? Wait: isn’t that the price for the actual Pac Heights, like where Danielle Steel lives? Yes, this unit allows pets and yes, boasts not 1 but 2 walk-in closets you could potentially house roommates in; but still: $3,100 a month for a one bedroom is steep.

SoMa

The SoMa is all the rage now, thanks to tech boom 2.0, aided also by Twitter setting up camp in a less than savory South of Market area in exchange for a tax break. Suddenly the ‘loin is looking more tender and folks are shelling out what used to be Upper-Fillmore prices for anything near the “Multimedia Gulch.”

Example? Here’s a 2 bed, 2 bath 1,200 square foot loft on Sumner. Price: $3,800 a month.

South Beach

Remember the days when South Beach was little more than industrial buildings and tumbleweeds? Now South Beach is hailed as “up and coming,” though by the looks of this listing, it has fully arrived. Here we have a 2 bed, 2 bath condo on Main Street for $6,800 a month.

Russian Hill

The stately neighborhood only gets more so, it seems. Rents here, always dear, have now reached rather astounding levels, such as evidenced by this 3 bed, 2 bath single-family home (address undisclosed but there’s a Van Ness address listed on one of the photos in the listing linked here) for $11,000 per month.

If these rents seem (still, again, once more!) higher than ever, that’s because they are, according to Trulia’s study, The Trulia Price Monitor and the Trulia Rent Monitor adjust for the changing mix of listed homes to accurately describe and predict rents. Says Trulia: “Because asking prices lead sales prices by approximately two or more months, the Monitors reveal trends before other price indexes do.”

Highlights from the report

In August, asking prices rose 2.3% year over year, the largest annual jump reported yet by the Trulia Price Monitor and the largest year-over-year increases since before the recession. Excluding foreclosures, asking prices rose nationally 3.8% year over year. The month-over-month increase of 0.8% was the seventh consecutive monthly increase.

Among the largest 25 rental markets, rents rose the most in Houston andSeattle, where they climbed more than 10% year over year in August. Rents are no longer rising so quickly in Denver, San Francisco, Miami, Oakland and Boston, but that may not be much comfot: these hot rental markets are still seeing annual rent increases of 8% or more.

SF’s most popular ‘nabes

In a city with such an uber-popular rental market, which neighborhoods get the most attention? Trulia tracks the most searched for neighborhoods on its site, and here they are.

Can the madness continue?

What do you say, readers? The holidays and general real estate slow down are coming. Are lower rents– or at least an end to higher ones– coming too?

Anna Marie Erwert writes from both the renter and new buyer perspective, having (finally) achieved both statuses. She focuses on national real estate trends, specializing in the San Francisco Bay Area and Pacific Northwest. Follow Anna on Twitter: @AnnaMarieErwert

Article source: http://blog.sfgate.com/ontheblock/2012/09/27/sfs-most-popular-neighborhoods-fetch-dear-rent-indeed/

Bay Area renters squeezed in tight market

Tue, 17 Apr 2012 18:28:05 +0000

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