Having ticked up a few dollars from $2,741 in the fourth quarter of 2012 to $2,790 in the first quarter of 2013, the average apartment rent in San Francisco jumped 5.8 percent to $2,952 in the second quarter, up 8 percent year-over-year according to RealFacts.
Over in Oakland, the average monthly rent is up 10.8 percent year-over-year to $2,033 per month while down in San Jose it’s now $1,989, up 9.9 percent on a year-over-year basis.
Keep in mind that RealFacts’ figures are based on surveys of professionally managed apartment complexes with 50 or more units (which aren’t necessarily the norm in San Francisco) and reflect asking rather than effective rents after incentives.
San Francisco Rents Reverse Fourth Quarter Dip, Jump In Oakland [SocketSite]

Comments from Plugged-In Readers

  1. Posted by lyqwyd

    Wow, I was expecting rental prices to moderate for a while after the big increases over the last couple years, guess I was wrong about that!

  2. Posted by temporary shortage

    With rent control as our religion of choice, the San Francisco market will continue to outperform and surprise. As 8,000 new units are completed by 2015 if completed the rental market will deflate.

  3. Posted by Brahma (incensed renter)

    deflate? The rate of increase (i.e., the second derivative) might level out, but I disagree that “the rental market will deflate” unless you’re counting on a 2001 “dot bomb”-style economic implosion.
    If we’ve learned anything over the last six years, it’s that developers (and their investors) know how to hold inventory off the market, in a variety of ways, so that the market isn’t flooded with supply at any one time and prices don’t decline.

  4. Posted by lol

    I am not following you. “withholding” supply means “losing” money. Nobody could have told 5 years ago that rents would basically double. Therefore “withholding” new supply would have been pretty foolish, at least at that time.
    It’s very simple really and nowhere close to a conpiracy. Available land comes at a price. It costs $x/sf to build supply. Therefore new supply comes at a certain $/sf.
    Under a certain $/sf/month rent, building to lease is not viable to cover the original investment.
    Of course new supply might swamp demand and make rates go up. But the disconnect in SF is so deep between supply and demand that the only thing that could lower prices is an exceptional event. The dot-com bust, for instance, or the last recession which did the trick, but very marginally 4 years ago.

  5. Posted by lol

    I forgot: transforming rent control into a means-based (and taxpayer subsidized) system would also change the turnover rates and make the market closer to what it should be.

  6. Posted by Willow

    A little anecdote…I just rented an investment property in North Oakland recently. I had one open house and over 40 people showed over a two hour period. I expected it to be busy but was really surprised by the turnout. Most of the applicants were late 20’s/early 30’s hipster types. It was interesting how many already had some substantial savings tucked away. The demand is definitely still strong.

  7. Posted by Helmut

    Even if all 8,000 units come online by 2015, there is sufficient demand to absorb each one and still have people scrambling to find a place to live. There will be little if any impact on apartment availability as the current apartment construction boom follows many years of zero to minimal multi unit renal construction. There is significant pent up demand and not nearly not enough construction to satisfy it.
    Even though all new construction is not subject to rent control, it is unlikely that 8,000 units will have any impact on 160,000 rent controlled units.

  8. Posted by rabbits

    The Chron has a piece on Yahoo targeting 60,000 sqft of office space in SF (which SS covered yesterday), and in the article it lists others that are expanding including MSFT and GOOG. Great news for SF, especially areas finally getting some love like mid-Market, and great news for apartment/condo developers.

  9. Posted by lol

    ^ Socket Site has a thread on this too, if you scroll down the home page ^

  10. Posted by rabbits

    I think it is as relevant to comment on here as there. I’m neither bull nor bear anymore on SF real estate. It seems priced about 10% more than I would like for it to be, but that’s almost to be expected in a nice town. But apartment rents ultimately drive real estate prices, and rents are driven by the availability of (good) jobs. SF’s commercial base is expanding rapidly and the mix is changing. All good news, except for apartment hunters.

  11. Posted by lol

    I’m with you. I see it as yet another gold rush.
    This one was built on the ashes of the dot-com bust. But as valuations faded, people kept trying until they succeeded. Now the next generation of talent flocks here and joins the party.

  12. Posted by Brahma (incensed renter)

    Of course new supply might swamp demand and make rates go up.
    Were you in such a hurry to find a peg to post another comment about rent control that you didn’t have time to think? Or did you just typo?
    What model are you using to project that if more supply comes to market and “swamps” demand that rates would be made to go up?.
    Rates of what?

  13. Posted by Worried

    If Oakland had a better planning and governmental organization, they could have long ago taken advantage of the San Francisco housng shortage so that one does not have to live in a black building in a small box. Many would prefer to live in a larger unit with more light and air, and would not mind a 16 minute BART ride to get these additional ammeneties.
    I think Oakland could have easily made the effort to have been the Bay Area termination of HSR and should have built a competing Transbay Terminal.
    All it would have taken is a little civic imagination.
    The current housing fiasco is the result of an entire region that refused to deal with a severe housing shortage and transprotation infrastructure that was never completed or expanded to meet the current population. Banning parking in new towers is not going to make getting around any easier when there is no transit in place.

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