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The U.S. Treasury disbursed $25 billion to states for rental assistance in February. Congress then allocated another $21 billion in March. By the first of June only $1.5 billion of that money had actually reached renters – a total of 176,000 households.
With the federal moratorium on evictions set to expire at the end of July, a huge number of renters could be facing eviction. It is estimated that 11.5 million or 16% of all renters have fallen behind on their payments.
As the pandemic eases, rents in the Bay Area are slowly increasing, although they remain below pre-COVID levels for the most part. Over the last three months, San Jose has seen an increase of 2.9 percent, while Oakland is up 3.6 percent and San Francisco 5.3 percent.
Some analysts believe that rents may never return to pre-2020 levels because many who left the Bay Area during the past year will not return.
Even with the downturn in rental rates, Bay Area cities remain among the six most expensive areas in which to live in the nation.
As we ease our way out of the pandemic, many are wondering if this is a good time to invest in the rental market, particularly single-family rentals. The fact that housing inventory will remain in short supply means that home values will continue to appreciate – good news for investors. The fact that interest rates are expected to rise means that some would-be homebuyers will be priced out of the market.
As home values rise, rental rates are expected to rise as well. Of course, eviction moratoriums provide a level of uncertainty in all this. Experts predict that the number of renters will keep vacancy rates low in most areas. In addition more homes are being built specifically for rental use only.
We’ve heard quite a bit about Bay Area rentals decreasing, particularly in the metro areas of San Franciso, Oakland, and San Jose (in fact, we published just such a report last week). Now Zumper is reporting that rents in those three cities are seeing a modest increase for the first time in almost a year.
San Francisco saw an increase of 0.8 percent on a one-bedroom rental, while Oakland’s rates rose 2.56 percent and San Jose’s increased by 1.9%.
Analysts point out that it’s too early to predict a trend but all signs indicate that the rental drops have ended or at least plateaued.
According to Realtor.com rents in cities such as New York, San Francisco, Boston, Seattle, and Washington D.C. have seen large rental declines in the past year. The largest decline is in San Francisco here monthly rents have decreased by 34 percent for studio apartments, 26 percent for one-bedroom units, and 23 percent for two-bedrooms.
On the other hand, metro areas such as Sacramento ( 20.3 percent for studios, 12.4 percent for one-bedroom, 9.1 percent for two-bedroom units) have seen large increases.
Analysts predict that as the pandemic comes under control and the economy improves, renters will move back to cities such as New York and San Francisco.
Since the start of the pandemic and the possibility of working remotely – and the need for more space – landlords in the suburbs have seen record occupancy rates. Expecting this trend to continue for the foreseeable future many investors are funding build-to-rent homes.
As the demand increases, many traditional home builders are partnering with investors to build these rental homes. It is estimated that anywhere between 5 and 10 percent of new homes currently being built are for the rental market.
San Francisco, Oakland, and San Jose continue to lead the country in percentage of median-priced apartment decline but also continue to be among the most expensive places in which to rent. However, the percentage decline for all three metro areas was the lowest since March and may signal that the “freefall” of the last six months is ending.
Since March, rents are down in 41 of the largest 100 U.S. cities, with most of the declines coming in coastal cities. Midszie cities such as Boise, Idaho have seen an increase in rates.
In the Bay Area, Pleasant Hill is the only city to see an increase year over year, at 1.8%, with a one-bedroom median price of $1,761. Dublin currently has the highest Bay Area rental prices with a two-bedroom median of $3,275.
As more employees are working remotely and access to the amenities of city living – restaurants, bars, nightclubs, concerts, museums, etc. – remains restricted, rents are dropping throughout the Bay Area. In fact, 4 of the top US cities with declining rents are in the Bay Area: San Francisco (17.8%), San Jose (9.5%), Oakland (7.9%), and Fremont (6.3%).
Many apartment complexes are offering “move-in discounts.
Of course, rents in the Bay Area remain high compared with the rest of the country: the median price in San Francisco is $2,590, in San Jose $2,170, and in Oakland $2090.
Depending on where you look Bay Area rents continue to decline, while a few cities are up slightly. According to a report by Zumper, 27 of 31 Bay Area cities showed a decrease in rental prices. By and large, more expensive areas saw decreases while the increases were in less-expensive cities.
San Francisco saw median 2-bedroom rentals dip below $3000 for the first time in six years. On the other hand, Livermore (plus 9.7 percent), Concord (plus 3.4 percent), and Vallejo (plus 4.3 percent) all saw increases.
Analysts predict both trends will continue in the foreseeable future.
While much has been made about the extension of the eviction moratorium, the National Association of Realtors (NAR) is calling for emergency rental assistance for property owners who are facing their own financial crisis.
The NAR points out that landlords must still make payments on their property but will have no source of income under the moratorium extension. The vast majority of these property owners are mom-and-pop investors who are in danger of losing their properties.
