Top three markets for apartment rent growth call Bay Area home
New apartment complexes like the Paragon in Fremont, which opened in 2013, added much needed supply to the Bay Area apartment market.
The nation’s top three performing apartment rental markets are in the Bay Area, according to apartment research firm RealFacts.
While rental rates did not rise as fast in 2013 as they did in previous years, the Bay Area saw strong gains compared with the national average of 5.1 percent growth to an average rent of $1,093.
The Bay Area leaders include:
1. Santa Rosa-Petaluma with 12.2 percent growth and average rent of $1,438.
2. San Jose-Sunnyvale-Santa Clara with 10.1 percent growth and average rent of $2,153.
3. San Francisco-Oakland-Fremont with 9.8 percent growth and average rent of $2,044.
Other parts of the country are more affordable, but so are other metropolitan regions of California. The average rent in Los Angeles was $1,771 and in San Diego $1,529. Average rent shot up 8 percent in Seattle, but its average looks like a bargain at $1,252.
The good news for the Bay Area is that thousands of units are under construction and hitting the market in the next few years, said Nick Grotjahn of RealFacts.
“The demand is created by the employment and knowing that, a lot of developers piled into the area where there’s huge demand and not a lot of supply,” he said. “The supply that’s coming online is going to try to meet that demand, but it’s not going to over supply the market.”
The newer apartments tend to rent for the highest prices such as $3,000 studios in San Francisco. While some argue that breeds gentrification and prices out the middle and lower classes, Grotjahn argues that the most expensive units will draw well-paid workers and free up less expensive units in other parts of the region.
“There’s a certain threshold based on employment pay — people can only afford a certain amount,” he said. “If salaries are increasing and people are getting paid more, it’s going to push up prices, but my sense is that salaries are going to level off as well.”
San Francisco Business Times
Blanca Torres covers East Bay real estate for the San Francisco Business Times.