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After lull, Bay Area rents charge back up

Louis Hansen, The Mercury News on

Published in Home and Consumer News

A dearth of new apartments and a swell of new jobs have pushed Bay Area rents higher in recent months, keeping the region's title as the most expensive place in the country for renters.

Median rents rose 4.2% in San Jose, year-over-year, in the second quarter of 2019. In the Oakland and San Francisco metro area, monthly apartment payments grew 3.7% from the previous year, according to a new survey from listing site HotPads.

The median rent for all apartments -- from studios to multi-bedroom units -- in San Jose was $3,760, while in San Francisco and the East Bay prices rose to $3,560 a month. Those rents top the U.S. market, more than doubling the $1,545 median across the country.

Strong prices in the Bay Area rental market -- a boon to property owners and bane to renters -- have picked back up after a lull a year ago. Between 2016 and 2018, new high-rise apartments and development added supply, and many property managers offered discounts to fill space, said HotPads economist Joshua Clark.

But applications for Bay Area building permits -- the start of the long construction process -- have slowed from a peak in 2015, he said. With tech companies adding jobs to the swelling Bay Area economy, he added, it's hard to see the rising-rent trend reversing.

Higher rental costs have driven California lawmakers to consider wider rent control and more protections for apartment dwellers. A bill sponsored by Assemblyman David Chiu, D-San Francisco, would limit annual rent hikes to about 10% on certain properties and make it harder to evict tenants. The measure, AB 1482, has faced stiff opposition from property owners but has won preliminary support in the state senate.

 

Voters rejected a state-wide expansion of rent control at the ballot in November.

Little help has come to add new apartments, especially for low-income families.

Michael Lane, deputy director of the housing advocacy group SV@Home, said builders face several challenges developing market rate and affordable residential units in the Bay Area. Submitting plans and winning approval from local city councils takes at least three years and sometimes twice as long, he said.

Developers face challenges with few construction workers and higher costs for land and materials, he said.

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