The San Jose metro area, which includes Silicon Valley, weighed in with the highest average rent -- $1,759 a month -- among 43 metro regions monitored by RealFacts, a Novato apartment rental research company that released a report on second-quarter rental prices Thursday. The region also saw the biggest year-over-year increase, up 12.6 percent.
The San Francisco metro area -- encompassing the Peninsula, East Bay and Marin County -- had the second-highest rents in the survey, at $1,644, and the third-highest year-over-year increase, at 7.6 percent.
Rents are a barometer of the region's economic vitality and job market, and after several years of stagnation, this year they're pointing to recent job market gains. But they also signal the continued weakness of the housing market, with stiff competition for rentals throughout the region.
Renters are feeling the pinch. Some have decided to leave the Bay Area; others can't afford to move to bigger apartments because of high rents everywhere; and some have moved in with their parents.
School bus driver Beth Ahlquist thought about moving after the rent was raised on her Campbell apartment, but she decided to stay after checking out apartment rents in her neighborhood.
"I'm lucky. They're raising rents all over," she said.
Some cities have seen double-digit increases over the past year.
Sunnyvale was up 17.6 percent from last year to $1,731, back to where it was -- unadjusted for inflation -- at the height of the dot-com bubble. San Mateo was up 14.5 percent to $1,964 a month. Average rents in Mountain View increased 13.2 percent over the year to $1,812.
Cupertino and Palo Alto were among the least affordable Silicon Valley cities, with rents of $2,168 and $2,450 respectively. And both saw increases of about 14 percent.
The resurgent demand has apartment builders starting construction again, said Sarah Bridge, owner of RealFacts. "The developers are back and they are all looking for sites to build, especially in core markets like Santa Clara County," she said.
About 2,000 units are under construction in North San Jose, said Joe Horwedel, director of planning for the city of San Jose. But they won't come online for 12 to 18 months.
"What we're seeing in the rental housing market right now is truly an imbalance of supply and demand," said Joshua Howard, executive director of the California Apartment Association's Tri-County office in Cupertino. "We have lots of individuals and families that either have been affected by foreclosure or who are moving into the area" to take jobs, he said.
The East Bay has been affected more by foreclosure activity than job growth. That helps explain why more people are looking for apartments, said Jill Broadhurst, director of community affairs and advocacy for the East Bay Rental Housing Association.
"It's not because industry is booming or anything like that," she said.
Edie Torres, a 31-year-old construction worker who pays $900 a month for a one-bedroom Newark apartment, and his fiancee have been searching for a larger apartment for about two months. "It's pretty competitive, due to foreclosures. More people are renting now," he said.
After six weeks of searching for an apartment, Airika Audio expected to sign a rental agreement Wednesday for a two-bedroom apartment in Oakland. The 29-year-old concert producer had moved up to the Bay Area from Los Angeles in search of better financial opportunities for her business. "The location is not my first choice," she said of the apartment near Lake Merritt.
"The market was flooded and lots of property owners did not need the money. They were a little pickier, and holding off for that tenant, that dream tenant," she said.
"By choice or necessity, there is a growing trend toward rent over buy," Bridge said in a statement Thursday. RealFacts tracks rents in larger apartment complexes of 50 or more units. Rents in smaller ones tend to be somewhat lower.
Ron Stern, chief executive of Bay Rentals, a rental service in San Jose that covers the entire Bay Area, said he's seen increases of 5 or 6 percent since the beginning of the year for the smaller two- and four-plex type apartments RealFacts does not track.
"Availability is getting a little bit tougher because of foreclosures," he said. "A lot of people who are losing homes are looking for rentals and still have good incomes. Employment is also getting better in this valley. More people seem to be coming in."
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