One of the Bay Area’s widest and most intractable problems is the painfully high cost of housing, generally ranked as worst or second-worst in the U.S. This de facto “user surtax” on living anywhere near San Francisco or the Peninsula makes it especially difficult for businesses or public institutions to recruit and retain the work force needed for staying competitive and contributing to the continued growth of Bay Area prosperity.
Now a new frontline is forming in the housing cost battle, significantly worsening the problem. For a brief recent period during the slump and early recovery of the high-tech and travel/hospitality industries, the San Francisco-Silicon Valley corridor experienced a respite in fast-rising apartment rents. But all the latest numbers from rental tracking agencies and property management specialists are warning that the comparatively relaxing intermission has again ended.
Nervous groups of apartment hunters are crowding open houses again. As soon as a new listing is posted online, the phone starts ringing within minutes. Landlord negotiations are once more a thing of the past, and forget about renting with your pet. Unless you earn close to six figures, expect to pay at least half your income to rent your next apartment.
According to one new survey, the average San Francisco rent for all types of apartments has climbed to $1,499, and in San Jose it is $1,569. One-bedroom San Mateo County apartments are known to rent for $2,000. Some rents are reported to have been boosted 20 percent for attractive units in sought-after neighborhoods near colleges, public transit or nightlife.
The desperation level is not nearly as bad as it was at the height of the dot-com boom, when Silicon Valley professionals could barely find any overpriced hovels available and some areas not subject to rent control were forcing tenants out by demanding huge increases. But clearly the situation is headed in that directionagain.
A combination of powerful factors fuels this latest overheated Bay Area rental market: More jobs mean more housing demand. Easy mortgage-loan credit has dried up, so potential home buyers wait out the market by continuing to rent. Some landlords are being squeezed by adjustable-rate mortgage increases and must either collect higher rents or face foreclosure.
Formidable obstacles to building more housing — especially rental units — are commonplace in high-density metropolitan regions such as the Bay Area, making residential shortages and high costs a particularly intractable problem. So this is a time when creative new approaches must be sought.
Some of the more apparent improvements could be to ease the regulatory barriers for building in-law second units in the suburbs and to fast-track conversion of vacant office buildings or other commercial properties in The City. Simple changes like this could do much to ease the worst of the crunch.