New Units Don’t Put Damper on Second-Quarter Apartment Rents
Asking rent for a one-bedroom apartment in San Mateo County now averages $2,516, up 12.4 percent compared to a year ago, according to market research firm Real Answers. In Santa Clara County? The same unit type will set you back $2,336 on average, up 12.2 percent year-over-year.
“It’s really a landlord’s market,” said Nick Grotjahn with Real Answers (formerly Real Facts).
Unabated rent growth is likely to play into a growing debate about whether policy changes are warranted to rein in landlords. As I wrote earlier this month, more grassroots groups are organizing around the issue of renters’ rights, increasing calls for new or strengthened rent stabilization and eviction protections. But the efforts have seen mixed results at best so far.
While rents have been exploding during the current economic growth spurt, they have remained below the levels set during the first dot-com boom of 2000 when adjusted for inflation. That changed this quarter.
A one-bedroom in Santa Clara County averaged $1,613 in 2000 — or $2,257 in today’s dollars. This is the first quarter when the average asking rent surpassed that number in inflation-adjusted dollars.
The second-quarter rent growth comes as hundreds of new units have been built. Real Answers says 781 units were added in Santa Clara County along in the first half of the year. Occupancy, though, sat at 95.7 percent in Q2, virtually unchanged since a year ago.
“That really hasn’t put in a dent,” Grotjahn said. “It’s been quickly absorbed.”
A look at rents in specific cities shows a more nuanced rental landscape. In San Jose, one-bedroom apartments averaged $2,186 per month, Real Answers said. That was $128 per month more than in the first quarter. (Real Answers tracks rents at properties with 50 or more units, and the figures represent asking rents for new leases — not renewals.) San Jose occupancy stayed strong at 95.3 percent.
In Sunnyvale, the rent for a one-bedroom was $2,385, Real Answers said. That’s up $101 from the prior quarter. Mountain View’s one-bedroom figure was $2,589, up $125 from Q1.
If there’s a silver lining for renters, it may be that the rest of the year could cool down. Grotjahn noted that the first half of the year generally sees the larger rent increases.
“First quarter to second quarter seems to be, at least in the last two years, where the developers and third-party management firms get aggressive with rent hikes,” he said. “Then it mellows out and flattens out in the third quarter.”