Rents stabilize in San Mateo County

Michael Silva, Realtor of Capital Realty Group, which specializes in real estate on the mid-Peninsula, said Redwood City to San Mateo is the hot spot for rental units right now because of its proximity to both San Francisco and Silicon Valley, its access to good public schools and community-oriented downtowns.

“People are looking for walkability and ease of transit, Redwood City and a lot of the development going on there is in that downtown pocket,” Silva said.

In the last year, rents have both gone up and down, but the swings aren’t as wide as in years past. The most expensive city to rent a one-bedroom unit in is San Mateo, with an average of $2,796 per month. Not far behind it, Redwood City is second, averaging $2,779 per month. San Mateo rents decreased an average of $66 since last year. And in Redwood City, rent increased an average of $28 since last year, according to Zillow. Meanwhile, the cheapest place to rent a one-bedroom unit in the county is South San Francisco, averaging $2,383 per month, according to Zillow.

In January, a Zumper report recorded South City’s rents at an average of $2,880 per month for a one-bedroom. The report labeled the city as one of the most expensive to rent in the nation.

However, Pedro speculates the big change in prices could be a shift from new developments that were available on the market for higher prices, to an influx of older vacated apartments that are now on the market for cheaper.

“Now, what we are seeing a month or two later is that old unit in place of the new unit,” Pedro said. “New development frees up the older units and those landlords will need to drive prices down due to the inflation of rental units on the market.”

South San Francisco currently has 817 new units recently completed, under construction, or anticipated to be under construction soon; 40 of those units are available for below market rate, according to its website.

Millbrae and Belmont both averaged lower end rents for one-bedroom apartments, $2,475 and $2,438, respectively. And the remaining cities were all in the $2,700 range. As a comparison, the countywide average for a one-bedroom unit is $2,615 and the national average for a one-bedroom unit is $1,306, according to Zillow.

Silva said the consumer expectations are shifting and he predicts many of the older mom-and-pop landlords will be forced to renovate their properties to compete with the prime locations and various amenities new developments offer.

“The driving factor will be price; they will all be cheaper because they can’t compete with location, new development and amenities,” Silva said. “It is changing consumer demand patterns in how a rental unit should look so that is a downward driving force.”

Rent in the county has only increased an average of $51 since last year. The high was recorded in Millbrae with an increase of $250 a year, and the low in San Carlos at $106 cheaper than last year, according to Zillow.

Pedro said the numbers show the market is stabilizing and there is consistency in prices.

An increase of $250 a year equates to around $20 more a month, he said and a lot of that could be due to new inventory that brings the average price up. The Gateway at Millbrae Station opened in April and offers around 700 new apartment units.

“It’s a split decision year over year … It’s not really up everywhere or down everywhere, so it’s one of those things where it’s stabilizing,” Pedro said. “What I saw during the pandemic was that people gave up their studio and one-bedroom units. They aren’t back to pre-COVID levels yet, but they are trending up in prices toward that.”

Meanwhile, the two-bedroom market data nearly mirrors the data of the one-bedroom apartments. Redwood City was ranked the most expensive, averaging $3,717 per month. Not far behind, San Carlos and Burlingame are averaging $3,501 and $3,515, respectively. The cheapest two-bedroom units were recorded in Millbrae at $3,121 per month.The remaining cities fluctuate in price ranging from $3,400 to $3,500. In comparison, the county average is $3,375 and the national average is $1,775 for two-bedroom units, according to Zillow.

San Mateo’s two-bedroom average is $3,462. Pedro said that a lot of renters are getting roommates again after the pause from the pandemic.

Since last year, the average rent for a two-bedroom home increased by $191 countywide.

“Adding units and building at any price point will free up other units in other price points,” Pedro said.

He believes it doesn’t matter whether the new developments are priced affordable or not because the market will shake itself out. The people who can afford newer and more expensive apartments will rent them and the older units will become more accessible to the rest of the market. They will become cheaper in some cases, he said.

Silva echoed those thoughts and added that the tech layoffs affected the one- and two-bedroom units more than single-family homes.

“You would think rents would be falling but that’s not the case, there is still a lot of opportunity here and people,” Silva said.

The pandemic caused a lot of fluctuation in the market and now that it has settled, people are coming back to live in the Bay Area and not as many people are leaving like they did in 2020, he said.

“Rents have been in flux over the last three years but the market value is finally finding its stabilization point,” Silva said.

nick@smdailyjournal.com

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