Bay Area cities topped the nation for rising apartment rental prices in 2011, according to a new report.
In the greater San Francisco and San Jose markets, average rental prices increased by 10.4 and 12.2 percent, respectively, making the two areas the markets with the greatest rent appreciation in the country, according to a report by RealFacts, a company that analyzes rental data. The S.F. region includes parts of the East Bay, and San Jose includes other parts of Santa Clara County.
Click on the photo at right to see how rents have increased in the Bay Area.
Over the past four years, according to the survey, rental prices have climbed 13.7 percent in San Francisco, while occupancy rose only 1.3 percent. The City’s high apartment occupancy rate is one of the factors contributing to its rising prices, real estate experts agree.
“We’ve reached a point where there’s nothing out there,” said Craig Berendt, a broker with Berendt Properties. “People are knocking down my door to get an apartment.”
Renters now have to compete for apartments, sometimes creating a bidding war. Vacancies are filled quickly, and for above-average prices. Berendt recently rented a client an 800-square-foot Hayes Valley apartment with an outdated 1950s kitchen and without parking for $2,100 a month. About a year ago he would have been lucky to get $1,700, he said.
The tech industry, which is credited with contributing to the boom in both residential and commercial real estate, has created a renter profile of young, well-paid professionals who can afford the cream of the crop.
“Current renters moving in are pickier about what they want,” said Janan New, executive director of San Francisco Apartment Association. “They are willing to pay high rents, but don’t want to compromise on amenities.”
She said that means landlords have to deliver — by installing granite countertops, track lighting and other new features that also can drive up asking rates. The trend has made San Francisco a city that is increasingly unaffordable to middle-class residents, both New and Berendt said.
“I see our middle class really starting to dissipate,” Berendt said. “Obviously we don’t want that. We want a well-balanced class system, but the rents are just going through the roof.”
RealFacts’ report analyzes detailed data for 47 market survey areas in the country, including Los Angeles, Dallas, Denver and Tampa. Although the report omitted detailed information on major metropolises such as New York City and Washington, D.C., RealFacts spokeswoman Linda Burke said the company’s data on those cities supports its findings about San Francisco and San Jose.