SAN FRANCISCO — Apartment rents remain in a holding pattern in most major Western markets except California, where the contrasting fortunes of the state’s northern and southern regions continue to push rates in opposite directions, according to a real estate survey released Monday.
Pressured by a long run of layoffs in high-tech industries, San Francisco Bay area apartment rents during the three months ended June 30 fell for the sixth consecutive quarter, according to RealFacts, a Novato-based research firm.
Although rents in most markets remain about the same as a year ago, RealFacts said signs of weakness are appearing in Seattle, Denver, Phoenix and Reno, Nev.
Although apartment rents in the San Francisco metropolitan area remain the West’s highest, the average June 30 rate of $1,653 is 19 percent below its December 2000 peak of $2,036, RealFacts said. The June rent represents a 14 percent decrease from a year ago.
Rents in Santa Clara County — the Silicon Valley’s hub — have plunged even further, falling to an average of $1,432 in June, down 27 percent from a high of $1,951 in early 2001. Santa Clara County rents are 21 percent lower than a year ago.
Sacramento continues to attract more residents fleeing the Bay Area’s high housing costs, keeping it as the only Northern California rental market on the upswing. Second-quarter rents in Sacramento averaged $853, a 5 percent increase from the same time last year.
Meanwhile, Southern California rents continued to climb, reflecting the region’s healthier economy, experts said. While unemployment has climbed higher throughout the state, the job losses haven’t been as dramatic in Southern California as in the Bay Area.
Riverside and San Bernardino counties emerged as the West’s strongest rental market with an average second-quarter rent of $857, a 6 percent increase from the same time last year.
In San Diego, the average rent rose 5 percent to $1,112. Average rents went up 4 percent in Los Angeles to an average of $1,248 while Orange County’s rents edged up 2 percent to $1,215.
Outside California, rents barely fluctuated, moving up or down by 1 percent or less everywhere but Boise, Idaho, RealFacts said. The firm surveys 6,000 apartment complexes in 19 major markets west of the Mississippi River every three months.
The San Francisco Bay area’s steady decline in rents is raising concerns that the region’s still-rising home prices are headed for a hard fall in the next year or two.
A mid-priced Bay Area home in May sold for $413,000 — 21 percent higher than at the height of the region’s tech boom in early 2000, according to industry research firm DataQuick Information Systems.
Some economists believe the Bay Area home prices reflect an unrealistic expectation of a robust high-tech recovery.
“The only people that appear to be betting on a near-term tech recovery are the people buying homes in the Bay Area right now,” said economist Edward Leamer of the UCLA Anderson Forecast. “Investors around the world certainly aren’t expecting it.”
Unless the tech industry recaptures its former vigor, Leamer fears Bay Area home prices will crash, dealing another financially demoralizing blow to households that have already absorbed substantial losses in the freefalling stock market.
Home prices also are hitting new highs in Southern California, but the accompanying increase in rents make those gains look more rational, Leamer said. A mid-priced home in Southern California sold for $273,000 in June, a 17 percent increase from the prior year, DataQuick said.