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You are here: Home / Bay Area Real Estate News / Bay Area Apartment Rents Slower Increase

July 18, 2013 by Peter Maclennan Leave a Comment

Bay Area Apartment Rents Slower Increase

The San Francisco Business Times published an article this week about the slowing growth of Bay Area apartment rents. According to the article apartment rents in San Francisco grew by 9.9% in 2012. Apartment rents in the East Bay increased by 6.9%. A leading apartment advisor predicts that growth will be 3.2% in San Francisco and 3.3% in the East Bay.

Home Ownership and Supply

I believe two factors are contributing to the slow down in rental growth. First, we have seen the residential real estate market take off and a lot of buyers have gotten off the sidelines and are buying homes. This means that a lot of renters are moving to be homeowners. Second, a number of new rental projects are being constructed. Both of these items are increasing the supply and causing rental rates to slow.

Bay Area Apartment Owners

Existing apartment owners have benefited from the increased rents (the exception may be in rent-controlled areas like San Francisco, Oakland, & Berkeley). Cash flow is up and sales of apartments are at record low cap rates.

What does the tapering of rent growth and the increase in interest rates mean? Well, it probably means that the market is reaching the peak of the value cycle. Interest rate increases mean that buyers will have to pay less for properties to cover rising financing costs.

If you have questions about your apartment complex, please give me a call at (925) 385-8798.

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Filed Under: Bay Area Real Estate News, Real Estate Investing Tagged With: Bay Area, Commercial Real Estate Investing, Contra Costa County, East Bay, Investment Property, Real Estate Investing, Rental Property

About Peter Maclennan

Peter Maclennan is a Real Estate Broker at Maclennan Investment Group, Inc. a real estate brokerage and advisory firm. From novice investors to institutional property owners Peter provides tailored service to his client's needs. Call him today to discuss your real estate need at (925) 385-8798 or visit him on the web at https://www.maclennaninvestments.com. CA DRE License#01801793

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