Rents in five South Bay cities shoot past SF for the first time ever

For the first time ever, five South Bay cities are now more expensive than San Francisco.

The median one-bedroom in most-expensive Mountain View and second-place Palo Alto are both around $3,500, whereas San Francisco has plateaued at $3,000 for the last year, according to a new report from rental site Zumper.

Mountain View surpassed San Francisco for the first time in January of this year and was joined by Cupertino and Santa Clara in April, according to the report’s author Crystal Chen. The June data put Palo Alto and Sunnyvale on that more-expensive-than-SF list as well. 

“There has never been this many cities ahead of San Francisco,” Chen told The Real Deal through email. 

San Francisco simply isn’t seeing the 20 to 25 percent year-over-year rental increases of those top South Bay cities, which Chen attributes to a combination of return-to-office policies at big tech companies and more luxury new-build apartment communities coming online south of the city this year. But San Francisco is also not experiencing the double-digit drops of the early pandemic days, she pointed out.

“I don’t think it’s necessarily a bad thing that rents have been stable, it’s not showing people are moving out in droves since rents aren’t declining significantly,” Chen said. 

A recent survey from RentCafe showed that Silicon Valley has the richest renters in the country. With multiple rounds of tech layoffs over the last year, these highly paid workers may be seeing the value of in-office work, Chen said.

“Some tech workers who may not necessarily work for a company with a current RTO policy may also want to start thinking about a move closer to HQ since the tech economy has been very volatile and showing face in the office may help with job security,” she said. 

After Mountain VIew and Palo Alto, the next three most-expensive rental markets are also in the South Bay: Cupertino, Santa Clara and Sunnyvale. San Bruno, Menlo Park and Milpitas are also in the top 10 with median rents above $2,700. 

Although Emeryville took the number nine spot at just over $2,800, rents were generally less expensive in the East Bay, where Richmond, Vallejo, Concord and Antioch all had one-bedroom medians below $2,000 a month. Of those, Antioch appears to be a city to watch with rents up nearly 15 percent year-over-year. Alameda also saw a 12.5 percent annual rise. They were the only two cities outside the South Bay to see a double-digit increase. 

Interestingly, rents in Campbell were down by one-third even as many of its neighboring Santa Clara County cities were up significantly. Chen said that’s not an indication that the city has lost desirability among renters but rather that it is “leveling off” after “a ton” of new luxury buildings came to market around this time last year, shooting prices higher in the short term. 

Despite the dramatic year-over-year decline, its median $2,400 rent in June was up less than 2 percent versus May. The biggest month-over-month increases were spread out across the Bay Area, in Livermore, San Bruno and Pacifica, which were all up over 6 percent compared to May.

Chen predicted that rents would continue to rise as the summer is usually the busiest time for moves. 

“Many leases end around this time of year so the competition is high, which really puts upward pressure on rent prices,” she said.