Yes, it cheaper to rent than buy in the Bay Area

Green Escrow | Real Estate

A new report by realtor.com lists the metro areas where it’s cheaper to rent than to buy and the San Francisco / Oakland / Hayward area finished second nationwide as it’s 97 percent cheaper to rent a starter home.

Specifically, median rent for a starter home in the Bay Area is $2,943 and the monthly cost to buy is $5,798.

Not surprisingly the San Jose / Sunnyvale / Santa Clara area finished 4th with a rent-to-0buy difference of 83 percent.

Bay Area rentals continue to fall but for how much longer?

Green Escrow | Rental

San Francisco, Oakland, and San Jose continue to lead the country in percentage of median-priced apartment decline but also continue to be among the most expensive places in which to rent. However, the percentage decline for all three metro areas was the lowest since March and may signal that the “freefall” of the last six months is ending.

Since March, rents are down in 41 of the largest 100 U.S. cities, with most of the declines coming in coastal cities. Midszie cities such as Boise, Idaho have seen an increase in rates.

In the Bay Area, Pleasant Hill is the only city to see an increase year over year, at 1.8%, with a one-bedroom median price of $1,761. Dublin currently has the highest Bay Area rental prices with a two-bedroom median of $3,275.

Bay Area rents continue to fall

Green Escrow | Rental

As more employees are working remotely and access to the amenities of city living – restaurants, bars, nightclubs, concerts, museums, etc. – remains restricted, rents are dropping throughout the Bay Area. In fact, 4 of the top US cities with declining rents are in the Bay Area: San Francisco (17.8%), San Jose (9.5%), Oakland (7.9%), and Fremont (6.3%).

Many apartment complexes are offering “move-in discounts.

Of course, rents in the Bay Area remain high compared with the rest of the country: the median price in San Francisco is $2,590, in San Jose $2,170, and in Oakland $2090.

New Development: Targeting the Middle

Green Escrow | Rental

The chronic shortage of housing in the Bay Area has left many developers focusing on one of two areas: luxury housing or low income housing. But what about the “great middle” – those who don’t make six figure incomes but can’t qualify for subsidized housing?

A group of developers in the Oakland area are focusing on just this demographic with an emphasis on “compact living”: units of 850 to 1000 square feet that can accommodate three to four people. These units will often include parking, gyms, and communal areas with an eye to keeping rents reasonably low and affordable.

Current plans call for a two bedroom unit in Oakland to rent for $2,950 per month – which is about the going rate for a studio in San Francisco.

Bay Area Rents are … Falling (!)

Green Escrow | Rental

Yes, according to new data from Axiometrics, rents from August to September dropped from $2,800 to $2,718 in San Jose (off 2.9 percent); from $3,301 to $3,226 in San Francisco (off 2.3 percent); and from $2,413 to $2,378 in Oakland (down 1.5 percent).

Now, to keep things in perspective, rents in the Bay Area are generally up from 2015: San Jose – 0.6 percent; Oakland – 2.8 percent, while San Francisco actually dropped 6 percent (but still a whopping $3,483 for a one-bedroom apartment).

And to keep things really in perspective, the average national rent in September 2016 stood at just $1,290.

Bay Area Rental Rates Cooling?

Green Escrow | Rental

According to a recent report by RealFacts, a real estate market research firm, Bay Area apartment rentals rose only slightly during the past quarter with Santa Clara, San Mateo, and San Francisco counties even dropping slightly.

Rents at large apartment complexes in the Bay Area averaged $2,238 in the last quarter of 2014, an increase of only $4 from the previous quarter but up 11.3 percent from the previous year. Rents in Contra Costa County were the cheapest in the nine counties, averaging $1,676 while San Francisco remains the most expensive at $3,392.

Experts disagree on the long-term rental trend. Some see it as finally flattening out while others point to the continued increase in income in the Bay Area along with a short supply of units, both of which are elements conducive to continuing rental increases.