Plummeting inventory of homes for sale accompanied by a new wave of tech workers have San Francisco’s rental and real estate markets continuing to boom.
The average monthly price of an apartment lease has risen to $2,734 — up 12.9 percent since 2011 — according to data compiled by the rental data firm Real Facts. The spike in San Francisco rents seems to be spilling over to cheaper markets like Oakland, where the average rent is now $1,835 — up 14.4 percent since last year. Pacifica, where rents now average $1,908, has experienced a 15.6 percent increase.
“Outlying areas are starting to benefit from the improvement of Silicon Valley and San Francisco,” said Nick Grotjahn of Real Facts. “But you can still go right across the Bay and to Oakland and pay almost $1,000 less per month.”
At a forum Tuesday sponsored by the San Francisco Planning and Urban Research Association think tank, housing developers were asked whether The City is experiencing a “rent bubble.” Their answers didn’t break down along clear yes-or-no lines.
“Not quite yet,” said Meg Spriggs, a senior development director with the developer AvalonBay, which is seeking to put more than 250 new apartments on Ninth Street near the new Twitter headquarters. “But I think we’ll start to see rents taper a bit. Sixteen percent growth is not sustainable, but I think there’s still room for growth.”
Rental prices have surged following a new influx of young, high-earning workers who don’t necessarily want to be tied down to one place, but who also haven’t yet amassed enough money to make a down payment for San Francisco’s average home price of $725,000.
A recent survey by Realtor.com shows that The City’s median listing price is up 15.4 percent since last year, which matches a similar upward tick in Oakland, where the average home is selling for $379,000. The number of homes for sale in San Francisco is down 40 percent since last year, and nearly 60 percent in Oakland.
And where apartment owners in the mid-2000s fought to convert their units to condominiums so they could be sold, the popular move in today’s market is to build what could be considered condos and instead rent them as apartments.
“It’s the reverse trend now,” Grotjahn said.
Even with rising rents, the disparity between who can only afford to rent and who can buy in San Francisco remains large, said Kevin Kearney, a Coldwell Banker real estate agent who works throughout the Bay Area. He said even though high-earning young tech workers might not be able to afford homes just yet, in some cases their parents can.
“With the rising rents, we’re definitely seeing some people get off the fence,” Kearney said. “But still, a lot more people can afford to pay rent on a monthly basis — even if it’s higher than a mortgage payment — than those who can come up with a down payment. So we’re seeing more and more of those down payments from parents.”
Source: Real Facts