Nationally…several reports indicate the national rental markets continue to be strong and in fact rents nationally have reached an all-time of $1,042 per month according to Meyers Research. Demand fundamentals should continue to be strong in the near term. The housing market crisis is not completely over and former homeowners are still being pushed into the rental market. Beyond that, Echo Boomers are entering the rental market and in A+ locations new development has experience strong rental demand. The shadow market of single family homes does not compete for this renter as they prefer apartments in the cities, near their workplace and nightlife. In general, rents have increased steadily since the first quarter of 2011 but at a slower pace than a year ago. The national occupancy rate in the third quarter increased slightly to 93.9%. Existing multifamily properties by class in the United States are as follows: 70% class C, 17% are class B and 13% are class A. Class A apartments generally are less than 10 years old and have an upgraded amenity package.
San Francisco/Oakland/Bay Area are experiencing employment and economic growth that is one of the strongest in the country. San Francisco’s small business formation has been accelerating over the last couple of years and is driving apartment rents rapidly upwards in the City. As has been the case in past economic upturns, rents in the City become too high for many young workers and they seek housing elsewhere. The East Bay has been the main benefactor of this with easy access to public transportation including BART and ferries. The average turnover increases in rent as reported in the last East Bay Rental Housing survey in Berkeley was 7.1% and in Oakland was 7.0%. The survey pointed out that Oakland’s vacancy rate dropped from 6.1% in 2009, 4.6% in 2010 to 3.4% in 2011. Berkeley’s vacancy rate was down to 2.4% in 2011.