Local rents continue to climb high

While Rentcafe.com shows lower costs, suggesting the average rent for studio through three-bedroom unit was $3,255 last month, it considers San Mateo the nation’s fourth most expensive market behind Manhattan, San Francisco and Boston.

With the high cost of living continually rising, some business experts are questioning the lasting repercussions for a region where those on the lower rungs of the income level are frequently priced out.

“What we have seen is a definite change in the mix of our economy,” said Matt Regan, of the Bay Area Council. “We’re seeing a lot more activity and lot more hiring and growth expansion at the top of the economy and a lot of displacement at the lower end. … It remains to be seen if that is a sustainable growth model. But I would argue that is a very dangerous experiment to engage in.”

Regan, representing the business advocacy group, makes the point that the Bay Area’s economy as a whole is likely not threatened, as job creation continues to outpace the rest of the nation and the value produced locally rivals that of other developed countries.

More concerning, he said, is the trend toward a top-heavy region, comprised mostly of the wealthy and those who can afford astronomically expensive rents and mortgages while the rest leave to seek more affordable parts of the state and nation.

“As we continue to grow and well-educated and ambitious people come to this economy and live in the Bay Area, they are displacing existing residents who are lower on the income scale,” he said.

The only remedy Regan said is building more housing, of which he claims the Bay Area generally and Peninsula specifically has not done nearly enough.

“It’s not sustainable from a societal or environmental perspective,” he said. “We need to do a better job of building housing in the Bay Area to accommodate our economic growth.”

The Rentcafe report argues the imbalance between housing supply and demand exists not just locally but across the nation, resulting in rates rising throughout the United States.

“Seasonal demand and increased activity are offsetting the wave of new apartments opened this year so far, translating into an even, but moderately strong yearly growth across all apartment sizes,” according to the report.

As a result, the national average rent jumped to an all-time high of $1,409 in July, up 2.8 percent from this time last year, according to a survey of the nation’s 250 largest cities.

The report also illustrates the ripple effect of the Bay Area’s cost of living, as Sacramento, Stockton and Fresno were among the nation’s top five mid-size cities to show the most aggressive growth last year. Rents in each city grew by an average of 5.6 percent since last year, outpaced only by Tampa, Florida, where rents jumped 6 percent over the same period of time. Of the three state cities, the most expensive is Sacramento, where average rents jumped to $1,337, according to the report.

The Bay Area is much more expensive, as the median rents among the 10 largest cities floated to $2,505 last month, according to the Apartmentlist report.

Some critics advise caution when taking in national rent reports, suggesting the websites stick to surveying newer units, pushing the median prices higher than a true reflection of the market. To that end, a quick Craigslist search reveals one-bedroom units in San Mateo renting for around $2,500 per month, while others float as high as about $4,000.

Ultimately though, the Apartmentlist report succinctly details the challenges facing those on the local rental market.

“Compared to most large cities across the country, San Mateo is less affordable for renters,” according to the report.

austin@smdailyjournal.com

(650) 344-5200 ext. 105