Surging South Bay rents may soon surpass even San Francisco’s sky-high prices, as renters who were unable to leave the city until this year reach the end of their leases and flee for more space.
One-bedroom rents jumped almost 22 percent in Mountain View, while they rose 11 percent in Palo Alto and at least 10 percent in Sunnyvale, San Jose and Campbell, according to listing site Zumper. In San Francisco, they increased just 6 percent — albeit at $2,800 a month, they’re still highest among regional cities. A one-bedroom in Palo Alto runs about $2,700 a month, $10 more than Mountain View.
Rents plummeted by almost a quarter in 2020 in San Francisco as tenants fled in the immediate wake of shelter-at-home orders, seeking roomier apartments and a lower cost of living. More left last year and spread out throughout the Bay Area, particularly the South Bay, said Zumper data journalist Jeff Andrews.
“While some in SF had the means to pick up and leave whenever they wanted, others had to wait until their leases expired or until they had enough money to move,” he said in an email. “This resulted in wealthy people leaving the city immediately after the pandemic began, and then a trickle out of young professionals and (relatively) lower income people as leases expired.”
Expectations that office life might soon resume is another reason for the South Bay’s rent explosion, according to Andrews. Yet it’s less significant than the absorption of San Francisco tenants.
People in one-bedrooms tend to be single and have more flexibility in where they live, which could explain why two-bedroom rents in San Francisco have been more stable, rising 10 percent in 2021. Rents for the bigger units also rose in the South Bay cities , though not as much as one-bedrooms.
The inverse trend in San Francisco can be explained in part by the fact that rents have fallen so much that it’s now possible to rent a two-bedroom for about the same as what a one-bedroom cost prior to the pandemic. A median one-bedroom would set you back $3,500 a month in March 2020, down 5 percent from a year earlier. Median two-bedroom rents stood at $3,850 last month.
Two-bedroom renters are also more likely to be sidelined by the region’s booming housing market, Andrews said. “They are priced out of the owner-occupied market and stuck renting, or are still looking to buy and just haven’t yet.”
Affordability issues in the housing market and a lack of apartment vacancies will keep rents up in all markets this year, Andrews said. He doesn’t anticipate that the Omicron surge will impact rents in any significant way since it has yet to lead to lockdowns and seems to cause milder symptoms than prior variants.
“The economic fundamentals still point to rent rising,” he said.