Rent costs are on the rise in San Francisco and San Mateo County due to a sluggish homeownership market and housing demand from tech industry workers opting to rent instead of buy, according to new data compiled by Novato-based RealFacts.
Compared to second-quarter data from 2010, rents rose 8.6 percent in San Francisco and 9.3 percent in San Mateo County, for monthly averages of $2,400 and $1,800 respectively.
The trend can be pegged to a dwindling rental supply and increasing demand from new workers with high-paying jobs, according to RealFacts owner Sarah Bridge.
“Talent is coming into the area. It’s not that there are so many jobs, but the ones out there are paying well,” Bridge said, adding that although the new tech boom is similar to the dot-com bubble of 2000, it is bringing workers with a more experiential, less materialistic mindset. “They’re not big into being tied down to a big piece of real estate.”
According to the real estate data aggregator Zillow.com, 480 homes were sold in San Francisco in May, down 22 percent in a year-over-year comparison. Meanwhile, RealFacts data show supply running out in San Francisco and San Mateo County, both with a 96 percent occupancy rate, up 6 percent and 1 percent, respectively.
The factors are helping San Francisco maintain its status as one of the most expensive big-city rental markets in the country, which has advocates for current tenants taking notice.
“It’s making it a landlord’s market,” said Ted Gullicksen, executive director of the San Francisco Tenants Union. “We could see more evictions, more tenant buyouts.”
Gullicksen said although The City’s rent-control standards keep some costs in check for renters, state law prevents the controls from being applied to units themselves. Like in 2000, Gullicksen said, he fears without cheaper options, residents could be pushed to the outskirts of the Bay Area.
“I think we’re headed back in that direction,” he said.
Of the 43 markets examined by RealFacts, 41 posted rent increases, with the biggest gains seen in the Bay Area. San Jose, the unofficial capital of Silicon Valley, experienced the largest increase at 6.6 percent, up from $1,650 to $1,759 per month.
||San Mateo County|
|Two bed, one bath||$2,394||$1,838|
|Two bed, two bath||$3,272||$2,272|
|Three bed, two bath||$2,975||$2,787|
|Three bed, three bath||$3,609||$3,049|
|San Francisco||San Mateo County|
|Second quarter 2010||$2,214||$1,646|
|Second quarter 2011||$2,422||$1,815|