Those seeking entry to the traditionally tight and expensive Peninsula home rental market may enjoy some temporary relief according to experts who claim a cheaper home may be easier to find now than years past.
Data analyst Chris Salvianti for real estate reference website ApartmentList.com said the 1.7 percent rent growth in San Mateo from last year is lower than the 2.4 percent national average, and reports from February show asking prices declined by 3.5 percent from the year prior.
He said similar dips in San Francisco and San Jose could trickle to the Peninsula, showing the historic hikes experienced regionally over the past few years to likely be unsustainable, especially when considering the new units currently under construction are coming available to serve the high demand for housing.
“A lot of what we are seeing in the Bay Area and more expensive areas across the country is that we are reaching a tipping point where rents have skyrocketed for the past few years,” he said. “And with the oncoming supply, things are starting to flatten out because the market can’t sustain it.”
Salvianti said the depressed growth trends began in the second half of last year, and should continue for the rest of this year.
Marilyn Andrews, a property manager and real estate broker with Boardwalk Investments in San Bruno, echoed a similar sentiment.
“Rents came down somewhat I believe because the overbuilding in San Francisco,” she said, claiming those who previously would have sought a room in San Mateo County due to proximity to the city may be choosing instead one of the new apartments in San Francisco.
Andrews, who has worked for more than two decades in the local real estate industry, said she considers the current market near the median of the highs and lows she has witnessed previously.
“I’ve been in this business for a long time and I’ve seen it dead and I’ve seen it just screaming hot, and right now I’d say we are right in the middle of it,” she said.
She said she too expects the current market to persist for the foreseeable future.
“I don’t have any reason to think it will go way up or down,” she said.
Salvianti pointed to outer perimeter communities of the Bay Area as the more volatile markets where rents are noticeably increasing, as residents who have been priced out of the central business areas are seeking a place with some proximity to the region’s corridor of quality jobs.
“We have seen a lot of flattening in the most expensive areas, but there is still significant growth in the outer areas of the region,” he said.
Looking ahead, he said rents will likely ultimately be tied to the economic growth of the area’s largest employers in the technology sector.
“San Francisco and the Bay Area as a whole is a pretty strong economy. But rent growth has significantly outpaced wage growth. So we are reaching a point where the two are at odds,” he said.
Jason Born, of Born Property Management specializing in renting single-family homes along the Peninsula, said his industry has been largely insulated from some of the fluctuations in the apartment rental industry.
He said he witnessed some downward momentum in his market during the winter months due to uncertainty regarding the outcome of the presidential election, as well as the poor weather. But in all, he said he expects the region’s rental market to continue to be pretty tough on the wallets of residents.
“We are truly blessed to live in a place where technology companies, biotechnology companies and other smart people want to have their businesses,” he said.
Also driving the high prices is the inadequate amount of housing to accommodate the global demand to live along the Peninsula, said Born.
“I think the real issue is that we have not been building enough housing or finding ways to be creative with our current housing to take the onslaught of people who want to be here or move here,” he said.
Salvianti agreed, and said while there has been an uptick in housing development in recent years, most of those units have been luxury apartments catering to those with means to pay high rents. He said he hoped more focus would be paid in coming years to developing cheaper units serving the area’s middle class.
“I would love to see more affordable units constructed, but a lot of that depends on whether developers see that as a profitable venture,” he said.
Considering the shortfall of apartments needed to meet regional demand brought partially by years of restrictive zoning, Salvianti said he expected any market softening experienced currently may only be temporary.
“We are probably unlikely to see rents decreasing or staying flat for that long,” he said.
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