The cost of renting an apartment in the Bay area continued to rise in the first quarter of 2016, although the rate of increase appears to be slowing after years of double-digit hikes. The average apartment in the nine-county region (Alameda, Contra Costa, Marin, Napa, San Francisco, San Mateo, Santa Clara, Solano, and Sonoma) rents today for $2,482 per month, up 7.1 percent from the first quarter of 2015 – which is not as steep as the previous year-over-year rise of nearly 10 percent.
San Francisco continues to be the most costly market. The average apartment there rents for $3,620 a month, though the rate of increase has slowed to 4.7 percent. In Oakland, the average apartment now rents for $2,866, and the rate of increase was 7.2 percent – down from the 13.7 percent year-over-year rise reported in the last quarter of 2015; a studio in Oakland rents for an average of $2,114. In San Jose, the average apartment now rents for $2,473, up 8.6 percent on a year-over-year basis, while a studio averages $1,802. In Concord, a studio apartment runs $1,385 a month, and a one-bedroom flat runs $1,474.
The regional leveling off is “a good thing,” said Jeffrey M. Mishkin, regional manager at the San Francisco office of Marcus and Millichap, the real estate brokerage firm. “The last three years we’ve lived through two to three times the normal rates of increases in rents,” he said. “It’s still a healthy economy, and it feels like a healthy rental market. But trend-wise and anecdotally, San Francisco, Oakland, and San Jose all seem to be experiencing a little slowdown in the rate of increase — a flattening, not necessarily a dip.”
While some suggest that the tapering increases are an indication of consumer resistance to too-high prices, others point to different factor that makes area rents go up and down: jobs and how much people are paid. When the area’s wages go up, so does the cost of rent. When they drop, so do rental prices. For example, research along this line of thinking reveals that the housing-price booms in the late 1970s and 1990s in San Francisco almost exactly match the employment booms at the same time.
Based on those historical trends, it’s possible that the rate of increase will go back up, should the area’s wages rise in sync with a recovering economy. If that turns out to be the case, the only countervailing effect would be the construction of a lot more moderately-priced apartment units.
Marques Fields
The cost of renting an apartment in the Bay area continued to rise in the first quarter of 2016, although the rate of increase appears to be slowing after years of double-digit hikes. The average apartment in the nine-county region (Alameda, Contra Costa, Marin, Napa, San Francisco, San Mateo, Santa Clara, Solano, and Sonoma) rents today for $2,482 per month, up 7.1 percent from the first quarter of 2015 – which is not as steep as the previous year-over-year rise of nearly 10 percent.
San Francisco continues to be the most costly market. The average apartment there rents for $3,620 a month, though the rate of increase has slowed to 4.7 percent. In Oakland, the average apartment now rents for $2,866, and the rate of increase was 7.2 percent – down from the 13.7 percent year-over-year rise reported in the last quarter of 2015; a studio in Oakland rents for an average of $2,114. In San Jose, the average apartment now rents for $2,473, up 8.6 percent on a year-over-year basis, while a studio averages $1,802. In Concord, a studio apartment runs $1,385 a month, and a one-bedroom flat runs $1,474.
The regional leveling off is “a good thing,” said Jeffrey M. Mishkin, regional manager at the San Francisco office of Marcus and Millichap, the real estate brokerage firm. “The last three years we’ve lived through two to three times the normal rates of increases in rents,” he said. “It’s still a healthy economy, and it feels like a healthy rental market. But trend-wise and anecdotally, San Francisco, Oakland, and San Jose all seem to be experiencing a little slowdown in the rate of increase — a flattening, not necessarily a dip.”
While some suggest that the tapering increases are an indication of consumer resistance to too-high prices, others point to different factor that makes area rents go up and down: jobs and how much people are paid. When the area’s wages go up, so does the cost of rent. When they drop, so do rental prices. For example, research along this line of thinking reveals that the housing-price booms in the late 1970s and 1990s in San Francisco almost exactly match the employment booms at the same time.
Based on those historical trends, it’s possible that the rate of increase will go back up, should the area’s wages rise in sync with a recovering economy. If that turns out to be the case, the only countervailing effect would be the construction of a lot more moderately-priced apartment units.