A severe housing shortage in Silicon Valley has led to nearly a dozen would-be renters elbowing each other for each available apartment.
Some 11 renters are battling for each South Bay unit compared to a nationwide average of eight applications for each advertised rental dwelling, the San Jose Mercury News reported, citing a study from RentCafe.
More people are on the hunt for rentals as mortgage interest rates surge past 6 percent, making it harder to afford homes that generally cost more than $1.5 million in the region, Doug Ressler, a housing market expert with RentCafe, said.
Innovation in artificial intelligence in the South Bay tech industry has also lured back workers who left the region during the pandemic.
“What we see is some of the newer technologies beginning to show there is life in the Bay Area,” Ressler told the Mercury News.
Competition outside of Silicon Valley has been slower, however, which Ressler attributed to a region-wide shift to remote work. In San Francisco, six renters are applying for each apartment. And in the East Bay, nine renters vie for every unit.
In the South Bay, however, the increased demand isn’t significantly hiking rental rates.
That could be because more apartment complexes are opening amid statewide efforts to spur construction, including proposed laws to make it easier to convert empty office space into housing, Ressler said. RentCafe predicts more than 4,000 units will open this year, increasing the South Bay’s number of apartments by 3 percent.
For its report, RentCafe, a Santa Barbara-based online apartment search platform, looked at apartment application rates, lease renewals and occupancy levels to come up with competition scores for 134 of the largest rental markets across the country. The report analyzed buildings with more than 50 apartments and didn’t include rent-restricted affordable units.
Despite the competition for apartments in Silicon Valley, it’s not the tightest rental market in the U.S. That distinction goes to North Jersey, with its proximity to New York City. Eight of the nation’s 20 most competitive markets are in the Northeast, according to the study.
The highest-ranked markets in California were Orange County coming in 11th, followed by No. 13-ranked San Diego and No. 20-ranked Eastern Los Angeles County.
But since last year, the South Bay’s score jumped the most nationally, making it the 27th most competitive place to rent.
The median cost to lease a two-bedroom apartment in Greater San Jose is $2,549 a month, 1 percent more than in February and 3 percent more than the same time last year, according to Apartment List
In Greater San Francisco, including the East Bay and Peninsula, a typical two-bedroom apartment rents for $2,186, less than 1 more than in February last year.
When the pandemic hit in March 2020, rental prices in Bay Area cities plunged by as much as 25 percent as renters fled to the suburbs and less expensive regions. Rents climbed back up in 2021 as public health restrictions eased and people returned.
In the middle of last year, Bay Area rents began to fall again as recession fears, tech layoffs and the rising cost of goods impacted demand. Now, despite economic uncertainty, prices are starting to tick up again.
— Dana Bartholomew
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