Rents are rising in the San Francisco Bay Area

Various media outlets report recently that rents in the San Francisco Bay Area are increasing. As a landlord, I have noticed this and certainly participated in this trend. But how much are rents really up. 10-15% from 2007 to 2008? Yes, that much. But how do rents look in a historical perspective?

People who are new to the Bay Area may not know what was going on in 2000, and 2001, when the dot-com bubble burst. At the peak, let's say in 2000, rents were very high. I remember the rates in 2000, when a friend moved to Foster City. I think she paid $2500 for a small 2-BR apartment in the 'Lantern Cove' complex, and was very happy to get it. Location, location, location - "Walk in 5 minutes to the Oracle towers". The photo shows Lantern Cove's rec room.

It's a clean apartment complex and back then it was one of the few who allowed her big dog. I believe the regular rent was $2300 and $200 extra for her Dalmatian.

What does this place rent for today?

I found this source which shows that her 2-BR/ 2-BA would rent for about $2000 today.

• $2300 in 2000
• $1400 in 2002 <--- estimate
• $2000 in 2008
  

Yes, rents have risen, but they are not where they were in 2000. Today's rent looks even better if you factor in inflation since then. Inflation over these 8 years should be at least 30%, so $2300 in 2000 are $3000 in today's money. Rents are still low!

This also gives you an idea..

1. how good it was to BUY in 2000, (mortgage vs rent),
2. how renting in 2004 was MUCH MUCH cheaper than a mortgage (on a 2004 purchase),
3. how now it is reverting again.

Will it revert to the 2000 scenario? Renters certainly hope not!

Rent vs Own

As people are afraid to buy a home, more competition on the rental market arises. The foreclosed homes are not automatically available as rentals, as some doomers try to make you believe. Las Vegas is a leading foreclosure center, yet has currently a very healthy rental market; the best since 2003.

This means rents are going up, and house prices have already fallen, more or less - depending on the area.

Check the numbers. Buying in your area may already be cheaper than renting.

Your feedback is welcome.