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For Bay Area renters struggling to afford apartments that keep getting more expensive, the latest numbers could seem too good to be true — the region’s runaway rent prices finally may be starting to level off.

San Jose is looking at the slowest start to the summer rental season in years. Rents in San Francisco are flat-lining. And Oakland saw a minuscule increase in rent prices last month.

That’s according to a new study by apartment search website RentCafe, which found the Bay Area is part of a nation-wide trend — while rents continue to increase, they’re doing it at a significantly slower pace. Experts say the slowdown suggests that in the near future, renters may finally find relief from the sky-high prices that are forcing people to flee to the Central Valley and beyond in search of cheaper housing.

“Renters are looking at an optimistic start of the rental season,” the RentCafe researchers wrote in the report released Thursday.

The average rent in San Jose last month was $2,692, or 2.1 percent more than at the same time last year, according to the report. That’s the slowest annual growth rate the city has seen since 2011 — a major milestone for a region where prices seemed to be climbing ceaselessly. The average rent in Oakland was $2,617, a 2.5 percent increase from the year before, which marks the second slowest growth rate the city has seen since 2012. The average rent in San Francisco was $3,453, a 0.6 percent increase, and the second-slowest growth rate the city has seen since 2011. San Francisco saw a cooling off last year, when rents actually dropped 3.3 percent from May 2016.

John Protopappas, president and CEO of Oakland-based real estate development company Madison Park Financial Corporation, predicts this is the start of a major slowdown in the Bay Area’s rental market. It’s all about supply and demand, he said. In Oakland alone 7,000 housing units are under construction, and as those finished units flood the market, Protopappas expects the city’s rents to drop 20 or 30 percent in the next two or three years.

“It’s going to become a renter’s market instead of a landlord’s market,” he said.

But the broader Bay Area continues to add more jobs than houses, and until that changes, prices won’t drop enough to have a significant impact on residents, said Mathew Reed, policy manager of SV@Home, an organization dedicated to supporting the creation of affordable housing in Silicon Valley.

“I think it’s nice to see us returning to a sane level of increase,” he said, “but we’re so out of whack and so many people are paying such a high proportion of their income already, I don’t see anything in the market right now that says housing is becoming more affordable.”

Nevertheless, the recent numbers are good news, Reed said. A 2 percent annual increase in rent prices is healthy, as it mirrors the rate of inflation, he said.

Meanwhile, flat-lining rents could impact real estate developers with plans for new buildings.  As construction costs continue to rise — some say a whopping 50 percent in the past five years, due largely to a shortage of workers driving up wages for skilled labor — new buildings won’t be erected if rents don’t keep pace with rising costs.

“It will slow down development until we get back to an equilibrium,” Protopappas said. “But it will take years … in the meantime it’s going to be a renter’s market for a long time.”

Article source: https://www.mercurynews.com/2018/05/31/bay-area-rent-prices-show-signs-of-cooling-off/

SAN JOSE — Silicon Valley will continue to boom for the foreseeable future, helping to spur a strong economy throughout the Bay Area, but the region’s surge will exacerbate housing and traffic woes locally, economic and political experts warned Thursday.

Those rosy and forbidding assessments emerged during a San Jose State University economic summit, whose headline speakers insisted that a housing boom is needed to help offset negative side effects of the remarkable economic and tech boom in the Bay Area.

Nevertheless, what also became clear during the annual summit at the university is that the increasing number of tech companies that have moved to San Jose, or are about to, has played a role in helping to place more jobs near where a huge amount of housing can be built or now exists.

“Lots of companies are expanding here,” San Jose Mayor Sam Liccardo said during a presentation. He was referring to major expansions in, or relocations to, San Jose by tech firms such as HP Enterprise, 8X8, Apple and Bloom Energy, along with Google’s wide-ranging plans for a transit-oriented community of offices, homes, retail, restaurants and open spaces in the city’s downtown.

“The center of tech gravity is shifting southward to San Jose. We are back in the game,” Liccardo added.

San Jose’s improvement in the Bay Area’s economic standings, however, has arrived with the unsettling reality that the region’s transportation systems are packed with vehicles and transit riders, home prices are skyrocketing, and middle- and low-income workers increasingly feel burned by the blistering increase in the cost of living.

One big problem: California and the Bay Area’s communites, with the possible exception of San Jose, have failed to build nearly enough housing to accommodate the employment wave that has bolstered regional and statewide economies.

“The housing crisis is going to get worse and worse and worse and worse,” Christopher Thornberg, founding partner with Beacon Economics, said during a presentation at the event. California needs construction of roughly 210,000 to 250,000 residential units a year but is building more like 110,000 annually, he estimated.

A further squeeze could emerge due to the steady increase in jobs.

Over the 12 months that ended in April, the total number of payroll jobs jumped by 3.6 percent in Santa Clara County. The South Bay’s gains were far ahead of the 2.3 percent increase in East Bay job totals and the 1.7 percent rise in the San Francisco-San Mateo region over the similar one-year period, state labor officials reported recently.

“Job growth has translated into higher pay for South Bay workers,” according to a Beacon report prepared for the economic summit. “As unemployment edges down to record lows, this causes wages to go up due to demand for labor. Wages have grown across most of the industries in the South Bay.”

During the third quarter of 2017, the average annual wage in the South Bay reached $124,000, according to Beacon. That was an increase of 4.2 percent from the same period the year before.

The higher wages, though, have created a fresh complication for people seeking dwellings in the South Bay and other parts of the Bay Area. Tech workers and others in higher wage brackets may be better able financially to compete to buy or rent homes or apartments.

“The tech sector will continue to thrive here and grow, but that could push out traditional sectors,” Thornberg said. “Low-income jobs could start to get pushed out.”

That, in turn, could make the Bay Area — and the South Bay in particular — more dependent on the technology industry for its economic strength.

“If there is a tech downturn, it will hurt much worse in the Bay Area,” Thornberg said.

Liccardo pledged to push forward with his plan for development of 25,000 residential units in San Jose through the end of 2022. He said that 12,000 were either approved or being reviewed for potential approval, although only 3,000 were actually under construction.

“This is a start,” he said. “We have a lot of work to do.”

Article source: https://www.mercurynews.com/2018/05/31/bay-area-silicon-valley-boom-will-continue-housing-woes-will-worsen-economist/

Built in 2007, the two-story Traditional has classic curb appeal with cedar shake siding, a gable-and-valley roof and an elongated front porch. The 6,750-square-foot home boasts open formal rooms on the main floor, a chef’s kitchen, a mudroom and an office. There are three walk-in closets in the master suite, and five bedrooms and six bathrooms in all.

Article source: http://www.latimes.com/business/realestate/hot-property/la-fi-hotprop-matt-cain-bay-area-arizona-homes-sold-20180601-story.html

For Bay Area renters struggling to afford apartments that keep getting more expensive, the latest numbers could seem too good to be true — the region’s runaway rent prices finally may be starting to level off.

San Jose is looking at the slowest start to the summer rental season in years. Rents in San Francisco are flat-lining. And Oakland saw a minuscule increase in rent prices last month.

That’s according to a new study by apartment search website RentCafe, which found the Bay Area is part of a nation-wide trend — while rents continue to increase, they’re doing it at a significantly slower pace. Experts say the slowdown suggests that in the near future, renters may finally find relief from the sky-high prices that are forcing people to flee to the Central Valley and beyond in search of cheaper housing.

“Renters are looking at an optimistic start of the rental season,” the RentCafe researchers wrote in the report released Thursday.

The average rent in San Jose last month was $2,692, or 2.1 percent more than at the same time last year, according to the report. That’s the slowest annual growth rate the city has seen since 2011 — a major milestone for a region where prices seemed to be climbing ceaselessly. The average rent in Oakland was $2,617, a 2.5 percent increase from the year before, which marks the second slowest growth rate the city has seen since 2012. The average rent in San Francisco was $3,453, a 0.6 percent increase, and the second-slowest growth rate the city has seen since 2011. San Francisco saw a cooling off last year, when rents actually dropped 3.3 percent from May 2016.

John Protopappas, president and CEO of Oakland-based real estate development company Madison Park Financial Corporation, predicts this is the start of a major slowdown in the Bay Area’s rental market. It’s all about supply and demand, he said. In Oakland alone 7,000 housing units are under construction, and as those finished units flood the market, Protopappas expects the city’s rents to drop 20 or 30 percent in the next two or three years.

“It’s going to become a renter’s market instead of a landlord’s market,” he said.

But the broader Bay Area continues to add more jobs than houses, and until that changes, prices won’t drop enough to have a significant impact on residents, said Mathew Reed, policy manager of SV@Home, an organization dedicated to supporting the creation of affordable housing in Silicon Valley.

“I think it’s nice to see us returning to a sane level of increase,” he said, “but we’re so out of whack and so many people are paying such a high proportion of their income already, I don’t see anything in the market right now that says housing is becoming more affordable.”

Nevertheless, the recent numbers are good news, Reed said. A 2 percent annual increase in rent prices is healthy, as it mirrors the rate of inflation, he said.

Meanwhile, flat-lining rents could impact real estate developers with plans for new buildings.  As construction costs continue to rise — some say a whopping 50 percent in the past five years, due largely to a shortage of workers driving up wages for skilled labor — new buildings won’t be erected if rents don’t keep pace with rising costs.

“It will slow down development until we get back to an equilibrium,” Protopappas said. “But it will take years … in the meantime it’s going to be a renter’s market for a long time.”

Article source: https://www.mercurynews.com/2018/05/31/bay-area-rent-prices-show-signs-of-cooling-off/

Southern California-based data company CoreLogic released its quarterly National Home Price Index Tuesday and found that San Francisco’s home price bounce since 2017 was the third highest in country.

Over the past two months, sources like the California Association of Realtors and Paragon Real Estate Group peg the median asking price of a San Francisco home at a record $1.6 million, nearly double what it was just five years ago.

So, it’s not surprising that CoreLogic’s Case-Shiller Index indicates an ongoing typhoon of housing expenses too, although the way that the Case-Shiller process calculates value does make for a few extra telling conclusions. Among them:

• The index’s 20-city composite score, which “measures the value of residential real estate in 20 major U.S. metropolitan areas,” was up 6.8 percent year over year in the first quarter. In San Francisco, however, it was 11.3 percent.
• That 11.3 percent appreciation is number three in the nation, behind only Seattle (at 13 percent) and Las Vegas (12.4 percent). SF’s overall index score of 261.8, however, is higher than both of those cities, coming in second only to LA’s highest-in-the-nation score of 278.27. The national score was just 198.94.

• For what it’s worth, SF also had one of the highest price spikes month over month in the index, up 2.1 percent. That’s second behind only Seattle’s 2.8 percent. Month to month comparisons are necessarily more volatile, so their ups and downs are not always that consequential, although the fact that those two cities in particular top the list is hard to ignore in the face of longer term trends.
• Possibly the most important part: Investment site Investopedia notes that the Case-Shiller method measures “the prices of single-family, detached residences” by “[comparing] the sale prices of the same properties over time.” This means that the index excludes almost all of the most recent construction in the city—condos and first-time sellers almost exclusively—and that the price jump reflects what’s happening with longtime SF metro area stock. This is why LA’s overall score beats out the Bay Area’s despite having a lower median price in most other measures.

You can read the full results of the quarter report here.

• Salary Needed To Buy SF House Up [Curbed SF]
• Case-Shiller Home Index [CoreLogic]
• 20-City Composite Index [CoreLogic]
• Understanding the Case-Shiller [Investopedia]

Article source: https://sf.curbed.com/2018/5/30/17409024/case-shiller-index-first-quarter-2018-san-francisco-housing