The San Francisco Bay Area rental market is unlike any other in the country. Unprecedented growth of tech companies has fueled the local rental market over the past few years, placing upward pressure on rents and downward pressure on vacancies.
What trends will shape the San Francisco Bay Bay Area rental market in 2019? Here are four major trends we’ll be watching in the San Francisco Bay Area rental market to boost your property’s performance and make 2019 a great year!
1) Ongoing Increases in Rent
It’s no secret that the Bay Area has some of the highest residential rents in the United States. While rents in other regions have begun to plateau, San Francisco Bay Area rents keep climbing, with some areas increasing as much as 10% last quarter. The city of San Francisco beat out New York, Miami, and Los Angeles as the most expensive city in the nation with one-bedroom rentals averaging a high of $3,570, according to Zumper’s annual analysis. As 2019 approaches, we will continue to watch this trend so Bay Area property owners can price their units at market rate.
2) Demand Shows No Signs of Slowing
According to Forbes, rental demand is slowing in most areas of the United States. However, this is not true in many western metro areas, including the San Francisco Bay Area. As tech companies ramp up their hiring efforts, demand outweighs supply. Zillow recently gave the area a 10 of 10 for market health. Even in the face of ongoing NIMBYism and regional resistance to new housing development, demand should remain strong next year.
3) Rent-Control Laws Weaken Statewide
Prior to November, it was unclear whether tougher rent-control measures would be passed by voters across California. But voters ultimately turned down Prop 10, maintaining the Costa Hawkins Act, which gives property owners the right to keep rents for all units constructed after 1979 at market levels.
This is great news for owners, investors and developers in the San Francisco Bay Area. Property managers as a whole will save money and resources related to training staff members on management techniques for rent-controlled properties. Since many had projected Prop 10 would pass, we are now paying attention to how its denial will shape the market in coming years.
4) Commuters Turn to Public Transportation
Public transportation remains a hot trend in the San Francisco Bay area. According to the San Francisco Municipal Transportation Agency (SFMTA), 62% of local residents did not use public transportation in 2013. The agency had projected that by 2018, 50% of local residents would drive privately and 50% would utilize public transit systems. By 2015, 52% of Bay Area residents started using public transportation somewhat regularly, and that number continues to grow.
San Francisco residents use public transportation, including commuter systems like Muni, more frequently than residents of any other metro areas besides New York, according to the SFMTA. As more tech industry workers and others continue to move to the area and traffic worsens, residents will likely turn to public transportation as a commuting option. Rental properties near transportation will drive new development and urban reuse projects in the local market, making this a trend we will keep watching in 2019.
San Francisco real estate investors, owners and managers should keep an eye on these four trends as 2019 approaches. If you have any questions, or to find out how MYND can help you maximize your San Francisco Bay Area property’s net operating income, contact us today.
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