Bay Area rents are hitting their highest levels ever, according to a report Wednesday, and they're being pushed up by demand from an improving jobs market and the lingering hangover from the housing recession.
Record rents were found across the region -- from Walnut Creek to Oakland to San Jose, according to a report by RealFacts, a rental information service that analyzed rents in apartment complexes with 50 or more units.
"They are absolutely at all-time highs," said RealFacts spokesman Nick Grotjahn.
In San Jose, the average monthly apartment rent jumped 10.1 percent to $1,811 during the past year. That tops the previous high of $1,674 set in 2001.
San Jose wasn't the only Bay Area city setting
Experts attribute the rent increases in part to the region's improving job market, particularly in the tech sector.
"What's going on here? It's jobs," Grotjahn said.
An equal force behind the soaring costs of apartment living is the housing market, which has yet to fully recover from the financial crisis of 2008, experts said. In many cases, those who want to buy a home can't get a loan and are forced to rent. Others, still not confident that the economy is fully on the mend, prefer not to own right now. And in some communities, the lack of houses for sale means renters can't
Soaring rents may benefit landlords, but they aren't good for the overall economy, said Richard Carlson, chairman of Spectrum Economics, which has offices in California.
"What it means is you've got millions of people who would normally buy forced into the rental market and they bid the rents up," he said. "People are forced into smaller and smaller units. They are paying a higher and higher percentage of their income for rent. And that means they can't spend money on other things, so everybody is hurt. This is happening everywhere (in the nation)."
Increasing rents are squeezing Bay Area residents like Claudia Gardetto, who lives in a two-bedroom Fremont apartment with her husband and three children for $1,300 a month.
"We've been wanting to rent a three-bedroom house," she said. But homes in areas that are appealing to the young family have rents ranging from $1,800 to $2,200 a month. "I don't want to pay that much for rent," said Gardetto, who works as a patient advocate in a health clinic.
And they don't want to move to Tracy, where rents are much cheaper, because it would mean she and her husband would have long and costly commutes to jobs in the Bay Area. Meanwhile, buying a home is out of the question.
"It's hard to save money to even put a down payment on a house," she said.
Rents have risen steadily since the second quarter of 2010 in the counties of Santa Clara, San Mateo, San Francisco, Alameda and Contra Costa, RealFacts said.
In Santa Clara and San Benito counties, rents have jumped 5.6 percent from the first quarter, to $1,961 a month, RealFacts said. That's the biggest quarterly increase among 44 metro markets tracked by the Novato company. Rents in the region that includes five counties -- including Marin, San Francisco, San Mateo, Alameda and Contra Costa -- were up 3.1 percent, from $1,753 a month to $1,808, the company said.
The incessant rent increases could slow this summer as many people lock in one-year leases before the start of the school year, said Ron Stern of Bay Rentals in San Jose.
"I don't see major increases a year from now," he said.
And landlords are apt to keep rent hikes to a minimum if they have tenants they like. "They are not going to charge more if the tenants are good," Stern said.
Still, the rental market now is as tough as he has ever seen it, he said. So renters need to act quickly if they see something they want.
"If you see a place you like and you don't take your checkbook out and write a check, chances are it's gone," Stern said.
Rents in some smaller complexes are negotiable, he added, depending on the renter's credit history. "They're looking for good tenants, as opposed to huge rent increases," Stern said.
Contact Pete Carey at 408-920-5419.