Rents Blog: Market rates for rentals jump

Rents Blog: Market rates for rentals jump

Michele Ellson

The going rate to rent in Alameda rose faster than in the Bay Area as a whole. Charts courtesy of RealFacts.

The average market rate of Alameda’s rental housing has risen more than 18 percent over the past 12 months, data obtained by The Alamedan show – faster than market rents in Alameda County and the Bay Area as a whole.

Asking rents in Alameda have risen 18.4 percent over the past 12 months, compared with 11.6 percent in Alameda County and 11.4 percent across the Bay Area, data released by the Novato-based research firm RealFacts show. The average market rent in Alameda in the third quarter of 2014 was $2,057, the data show, topping rents in Alameda County as a whole for the first time in two years.

The going rate for studios monitored by the firm went up 20.5 percent over the past 12 months, while the cost of three-bedroom units rose 36.1 percent, the data show. The numbers are based on data collected on nearly 3,000 rental units here in buildings with 50 units or more.

Overall, the increase is the second largest the Island has seen in the 21 years the research firm has been collecting data, rivaled only by a 23 percent spike between 1999 and 2000, a separate batch of data that list the average market rate for rentals from 1993 to 2014 show.

A growing economy and booming job market have propelled the rise in rents across the Bay Area, RealFacts’ Nick Grotjahn said. He attributed surging Alameda rents to “higher rents in adjacent areas (San Francisco and Oakland) coupled with Alameda’s relative affordability and proximity to these areas.”

Alameda rental units studied by the firm are nearly 97 percent occupied, a rate Grotjahn characterized as fully occupied. Occupancy of Alameda’s rental units grew to a high of 98.4 percent in 2000 before dropping to 87.5 percent in 2007 and then rising to its current rate, RealFacts’ data show.

The high demand for housing here could equal even higher rents in the future, Grotjahn said.

“Unless we see some relief in renters becoming homeowners (decreasing demand) and new development coming to the market (increasing supply) it looks like landlords will have the upper hand in pushing rents in the near future,” he said. “As rents continue to increase, we’ll see a pattern of migration to more affordable housing further and further from employment centers.”

Nearly half of Alameda’s residents are renters, U.S. Census data show.

Renters and their advocates have said they’re experiencing rising rents, and many have said they fear they will be pushed out of Alameda by higher rent costs.

“The numbers show people who are the backbone of this community are being pushed out. It also illustrates that, along with the urgency of curtailing rising rents, we need more housing, both affordable and market rate,” said Laura Thomas of Renewed Hope, which has advocated for more affordable housing in Alameda. “We have worked with landlords who recognize the rental crisis and want to help. I hope the new council will join us in working to stabilize housing for both long-time residents and newcomers.”

But landlords said the numbers don’t offer a true reflection of what people are paying to rent in Alameda.

Don Lindsey of Gallagher & Lindsey, whose firm manages more than 1,000 rentals, said his firm rents studios for between $1,100 and $1,200 a month and one-bedroom units for between $1,500 and $1,600 a month. And he said renters who have lived in a unit for one or more years are typically paying less than the current market rate.

“The market rent is not necessarily what the real rents is for the tenants in the complex,” Lindsey said. “Very typically, they’re 20 to 30 percent below what the market rent is.”

Doug Smith of Fuller Enterprises, which manages 2,000 units across the Bay Area and a 63-unit building here on the Island, said the new number doesn’t reflect earlier years when rents were effectively flat. RealFacts’ data shows rents dropping slightly in 2009 and 2010 and remaining flat for 2011 before rising over the next three years.

While Fuller gave its tenants rent increases of up to 12 percent this year, the average increase over the past 10 years was 2.9 percent, he said. And Smith said renter turnover in his company’s properties has been low because market rents in the Bay Area are high and that many of his existing tenants are paying rents that are below market rate.

“The market dictates the rents. We don’t dictate the rents,” Smith said. “It’s not as ridiculous as people are making it out to be.”

Angela Hockabout of the Alameda Renters Coalition small households are staying put due to the high rents. But Hockabout, who noted that Alameda lacks rent controls, said she's seeing families pushed out of two- to four-bedroom units by rent increases of 10 percent or more, and they're facing a tight market that offers few choices for replacement housing.

"Landlords love to say that it's 'just business' or it's 'the market,' but it doesn't change that landlords are making decisions that devastate families and Alameda needs stronger laws to balance the overwhelming amount of power that they have so that renters can feel secure in their homes," Hockabout said.

Alameda renters and landlords are engaged in a community process to discuss rent issues here and consider possible solutions to bring before the City Council. The council is expected to receive a report on the participants’ findings sometime in January.

While Vice Mayor Marilyn Ezzy Ashcraft and City Councilman Tony Daysog have expressed interest in fully exploring rent issues and possible solutions, Mayor-elect Trish Spencer has said she thinks the city’s Rent Review Advisory Committee is adequate for handling landlord-tenant disputes and Councilman-elect Frank Matarrese has said he doesn’t think the city has a role to play in addressing rent costs.

The Rent Review Advisory Committee offers a forum where landlords and tenants can voluntarily go to hash out rent disputes.

In addition to the charts displayed above, we’ve created a series of graphics based on RealFacts’ long-term market rent data.

Comments

Submitted by Bill2 (not verified) on Thu, Dec 11, 2014

Well, it appears that our new Mayor will now be paying more for the home she is renting. Maybe she can help control rental increases?

Submitted by struggling (not verified) on Thu, Dec 11, 2014

I've been searching for an apartment for two months now. Someone please show me one of those $1200/month units. In order to get any apartments in Alameda to show up in Craigslist you have to set the maximum up to $1600. There are only two units currently available in Alameda for UNDER $1600 as of 12/10/2014. One is $1600 and the other is $1595. Where-oh-where are those $1200 units?

Submitted by Jrad (not verified) on Thu, Dec 11, 2014

We looked in Alameda for a home, it was a rare 3BR home and was UPbid from $2100 to over $2500 per month... this market is crazy and will surely burst, then the greedy owners/managers will know our renters pain.

Submitted by kathryn (not verified) on Thu, Dec 11, 2014

Thank you to the renters' coalition and the Alamedan for all the work you're doing. As for Smith and Lindsey, they apparently subscribe to the "tell a lie often enough and people will believe you" strategy of problem-solving. They seem to think that even the people whose rents have gone up will believe their fabrications. As for the mayor-elect and matarresse, clearly neither have any idea of what they speak. RRAC has no teeth and cannot enforce. anything. It's interesting that she's formed an opinion before hearing the final report. And Matatrese. Really? The city has no role to play? That statement is so uninformed I hardly know where to begin. So, three words: Revenues, Schools, Neighborhoods. Figure the rest out, Frank. That's what you were elected to do.

Submitted by old native (not verified) on Thu, Dec 11, 2014

GREED!

Submitted by Actual Facts (not verified) on Thu, Dec 11, 2014

It is easy to copy info from RealFacts, but not a true picture despite pretty graphs. This company phones large apartment buildings only. In Alameda, this means luxury complexes with gyms, basketball courts, streams, etc. Last we looked, the average apartment building in CA was 16 units. Probably less in Alameda. We operate 360 units in Alameda. From 2003 through 2014 their combined income increased an average of .3% (yes, three tenths of a percent) annually after CPI (inflation). The property taxes are rising faster than our income. These are real numbers from tax returns. Not anecdotes based on phone calls from a phone bank, calling on-site managers that never see an operating statement, compiled into charts. If we are going to have a real discussion about this issue, we must use relevant data. Many of our existing tenants are hundreds of dollars below our market rents. New, higher paying, incoming tenants fleeing Oakland, Berkeley, SF are indirectly subsiding long-time tenants.

Submitted by Renter (not verified) on Thu, Dec 11, 2014

I'm glad you're not raising rents, but just because you don't do it doesn't mean that there aren't people who do and that's where the problem lies. I know elderly tenants in old Victorians who are being harassed to leave and threatened with high increases, I know families who despite working three jobs can't afford the $800 rent increase notice they received last month. What are these "good" landlords going to do about these abuses? I keep hearing about these good landlords proclaiming that because they don't raise rents more than CPI (which is great by the way), that somehow there isn't a problem out there, but clearly there is.

Submitted by New to the Island (not verified) on Thu, Dec 11, 2014

Thanks for the info Michele. But I do agree with Actual Facts here: this data comes from very large properties who typically charge a bit more than smaller landlords. And it does not reflect actual rental rates, just new rents.

And I feel everyone's pain. I was there for many years when living in SF. We could not afford to live in SF and decided to explore the East Bay. And we found and loved Alameda, enough to spend our entire life savings on a house here. As long as SF and Oakland become more and more expensive, there is not much one can do to control rents here in Alameda. It's a great place and more people want to live here. Rent control isn't the answer. It only favors those who do live here over those who want to live here. It limits the availability of existing rental stock because those under rent control will never move. So those who want to rent here will face even higher rents.

The primary way to solve this is basic economics. If supply is limited and demand is high, increase supply. People love Alameda and are flocking here in droves. We need to develop Alameda Point and Del Monte with thousands of units. We can find a solution to traffic issues. But perhaps we should designate many more of them as low/middle income housing so we can maintain the diversity of the community.

Submitted by Farhad Matin - ... (not verified) on Thu, Dec 11, 2014

To my neighbors who rent. Since most of my life I have been a renter I am aware of the vulnerable state some people feel. I only ask that you spend a few minutes and Google the words
"effects of rent control ". You will be overwhelmed by information that will make want to explore other options other then " rent control " . By no means am I saying that your hardship does not matter, I am however saying that there is a reason Rent Conttol has been outlawed by most states. We are about to develope 1/3 of our city ( Naval Base ) why not increase the number of " affordable units " ? As long as we remember that whether your name is on it deed or not , we are all Alamedan's . Just like we housing providers should not disregard all that it takes to run your household , you should not assume that a housing provider can absorb anything you throw at him. There are many layers to housing units . There is no your side and my side, without your side there is no my side.

Submitted by Just read (not verified) on Thu, Dec 11, 2014

"Economists are virtually unanimous in concluding that rent controls are destructive "
-American Economic Review

" Because rent control applies to buildings and not people, the benefits accrue unevenly across the tenant population."-SF Gate

"these controls result in a decrease in the supply of housing units."-SF Gate

" Long term rent freezes are undoubtedly harmful to economies " - The Journal of Economic Perspectives

"Most economists agree that rent control creates a housing shortage and increases prices, ultimately hurting the people it was supposed to help " -SF Examiner

"We can do more to protect the vulnerable, like tying rental aid to a needy individual rather than a housing unit."-SF Examiner

Submitted by Jeff (not verified) on Thu, Dec 11, 2014

Folks, read the charts above in better detail. You will see that in ALL of the units (studio-3 bed) the amount of rent in 2010 was at or below the rent in 2000. That's 10 years with NO increase. Now Google the 2010 census data for the city of Alameda and you will see that the median family income for the same period grew by 35%.
It's easy to just say that owners are just lying and greedy but thats just not true.
Trying to start panic will only result in frustration on both sides. Rents will stabilaze and then fall before they repeat the cycle once again. The facts clearly show that on average, rents are rising only 2-5% per year on average, barely the cost of inflation and well below the increase in median family income. If the renters coalition truely want to help, lobby for the City's housing authority to buy more housing or build more.

Submitted by Angie Scott (not verified) on Thu, Dec 11, 2014

Am I missing something? I just ran the numbers on the charts above and from what I can see, please correct me if I am wrong, over the period shown (25 years) all sizes increased on average between 4.2% to 5.4%. I don't have the inflation numbers on hand but I do recall in the 90's they were higher than now so it doesn't look as bad as the opponents of the landlords are making them sound. Sounds like the numbers mr smith and mr lindsey are giving are accurate and are backed up by the editors facts.

Submitted by Doug (not verified) on Thu, Dec 11, 2014

Rents in Alamda are more than 1/2 the cost per SF than San francisco and way less than Oakland. You can't compare Alameda to the rest of Alameda county. Alameda is popular because we are the best bedroom community to the City, at 1/2 the price. Alameda is not Hayward, San Leandro, Dublin, Livermore, etc....it's always been more expensive than its surrounding areas. Control the rent and you will end up with blight and bulldozed apartment replaced by condos and then you will really see rent go up when there is less apartments.

Submitted by Dave Garcia (not verified) on Thu, Dec 11, 2014

my brother was a fireman for Alameda about 10 years ago and talked about Harbor Island Apartments, a huge 500+ units slum building with crime and fires every day. Most if not all were on section 8 and low income. The building was in disrepair and it was a black eye for alameda.
When the owner sold and the owner tried to fix it up, these same renter groups harassed them and vilanised them in the media. 10 years later now you have a great complex and an asset to alameda. Moral to the story, don't believe everything you read from theses social groups, they would have loved to keep it status quo or sue the owner for such a bad building when it was the tenants and low rent that caused the problem.
If someone is displaced because of rising rents, call the Alameda Housing Authority and take the free rent they currently offer to over 4,000 renters (of the total 15,000 renters). Rent control of any kind will ruin the City, just ask for residents of Hayward and Oakland.

Submitted by Keep Alameda Ch... (not verified) on Thu, Dec 11, 2014

I was a renter for years. I think
that a maximum increase of 3% per year is fine. Maybe maximum of 3% per 5 years for 65 and over. I'm not all all for more housing, with the exception of Del Monte if they have lots of parking.

One thing I always respected was Alameda's long-time residents and families who basically kept Alameda quaint for over a century. I noticed many of the newer residents, both homeowners and renters have little regard in keeping Alameda quaint. Not adhering to speed limit, could care less about local things like Crab Cove, let alone even know what or where it is.

We went from renting to purchasing a house four years ago because we loved the small town feel here which is rapidly changing! New housing development is not a solution!

Submitted by Karen Bey (not verified) on Thu, Dec 11, 2014

A friend of mine shared with me that he lives in a rent controlled apartment in San Francisco – and he makes well over $250K per year. He said he doesn’t need rent control but he asked “why should I give it up if I don’t have to?

For rent control to be fair it needs to means tested – meaning that only the people who need or qualify for rent control should get it. Why should someone making $250K a year get rent control?

I understand the problem – but I don’t believe that rent control is the answer. I believe that increasing the rental supply and increasing the affordable housing inventory is the answer. The question is – how can we solve the rental crisis in Alameda without pitting the renters against the landlords? And what would it look like if we chose to focus on this question – rather than making an assumption that rent control is the only answer? There are a number of other ideas we can consider. Here’s one idea.

San Francisco adopted legislation that approved “in law” or “illegal units” as long as they were brought up to code and rented below market. Something like this could be a win for both landlords and renters. It would create an opportunity for landlords to expand their rental units, and it would contribute to the affordable housing inventory. San Francisco allows developments with fewer than 10 units to add one new unit, while developments with 10 or more units can add two new units. The new units cannot exceed 750 sq ft. We could create a special “rental housing crisis ordinance” that allows for these changes. I bet a number of these units can be brought on line relatively quickly if we made this a priority.

And Farhad – I’m glad to hear that you support housing development at Alameda Point. We will need voices like yours as we move through the entitlement process for Site A at Alameda Point.

Submitted by b. (not verified) on Fri, Dec 12, 2014

My, my...all the "haves" are out in force telling the poor little "have nots" that their problem isn't a problem.

Submitted by C. (not verified) on Fri, Dec 12, 2014

I am a renter. I was born in Alameda Hospital in the 1950's. My father was in the Navy and spent his entire 30 year career at Alameda NAS. My parents rented a duplex on Lincoln Avenue starting in the 1940's because they never could afford to own a home on the island but they considered themselves Alamedans to the core. My father was an active member of the Elks and Alameda Masonic Lodge. My husband and I raised our family (now grown) here. I have been a volunteer with scores of schools and non-profits in Alameda over the years. We are good neighbors. We maintain our rented home- even going so far as to hire a gardener at our own expense to maintain our home's yard. We have absorbed rent increases without complaint because our landlord has been fair so far. But, we have known for awhile that as we get older we will not be able to afford a rental as large as the one we now live in. We have known we will likely not be able to own a pet any longer if we want a more affordable rental. We always assumed we could downsize into a tiny rental once our pet passed away and we got older and our income declined. But, now we are older and our income is about to decline as we approach our 70's. Our whole plan to retire in place here in Alameda has come undone in the past year as we have watched rents dramatically rise. (Like another poster - we don't see any rentals - even studios in the $1,200 to $1,500 range. There are very few places for $1,800 a month even and we have been told by others that the competition is fierce for those.) We are panicked realizing that we probably will not be able to remain in Alameda and will have to relocate somewhere else. We are on a wait list for "affordable" market-rate senior housing that rents for $1,200 a month in Alameda but there is a 3 to 5 year wait list for it and even if your name comes to the top of the list there is no guarantee you will be accepted. We also do not know if the rent on those will increase in the future. Homeowners who have secure shelter, property management agencies and apparently our city leaders either do not see our situation as a problem or do recognize what we face and simply do not care. Picking up and moving when you are younger is quite different than moving in your 70's to a completely different community. We won't have the means to move to some senior retirement resort where ready-made friends come with the deal. We will have to painstakingly recreate a community for ourselves and make new friends all over again. I don't hold out much hope for rent control in Alameda. The real estate community will fight it vehemently and homeowners and landlords will want to keep the status quo. I just wanted to comment that there is a real human cost to what is happening. To brush it off and tell people who have lived here all their lives to "just move if you cannot afford it" ignores the pain people are experiencing. It also says an awful lot about the people who so easily just tell us to take a hike. Where is your compassion people? Is it all about money? Can the City not do anything to help people who would like to remain here but whose income is declining? Do only seniors who own their own homes have value in this community? Can more affordable senior housing be built in Alameda and can current long-time residents be given some preference to get on waiting lists for it? We just feel completely disposable at a time in life when we are about to retire and would actually have a lot to give back to the community - both in time and talent. Lastly, Mr. Cambra, Ms. Spencer, Mr. Mataresse, Mr. Daysog and the rest of the City Council -I hope you will take my comments to heart and not dimiss them out of hand. I do not think our situation is unique. I think many of us "boomer" generation Alameda renters share our fears for the future.

Submitted by PeonInChief (not verified) on Fri, Dec 12, 2014

One note: it doesn't appear that vacancy rate has much to do with rent increases. Vacancy rates have barely moved over the last 25 years, but rents have increased substantially at various points.

Submitted by old native (not verified) on Fri, Dec 12, 2014

To C. Thanks for setting the record straight. I'm in the same boat and there are plenty of other Alamedans who have lived here all their lives who may soon be forced to resettle in Who-Knows-Whereville to make room for the Johnny Come Latelys. So their only alternative to rent control is "build more and be happy". No greed there, right? Goodbye rent control. Hello gridlock.

Submitted by Karen Bey (not verified) on Sun, Dec 14, 2014

“We are on a wait list for "affordable" market-rate senior housing that rents for $1,200 a month in Alameda but there is a 3 to 5 year wait list for it and even if your name comes to the top of the list there is no guarantee you will be accepted.”

This is the issue C – that there is a lack of affordable housing in Alameda. The focus needs to be “how do we create more affordable housing in Alameda”?

Alameda Point has a 25% affordable housing requirement --- we need to make sure we develop housing at Alameda Point; and those that live in Alameda and are on a wait list should get first priority. The Del Monte project will also be providing affordable housing as well.

In the meantime, we may want to consider other alternatives – like my idea above where we grandfather in a number of in law units if they are brought up to code and rented under market.

Submitted by Karen Bey (not verified) on Sun, Dec 14, 2014

Old Native -- it's ironic that some of the very same people advocating for rent control do not want to see more housing development.

You can't have it both ways!

Submitted by Doug (not verified) on Sun, Dec 14, 2014

On the vacancy comment, yes, vacancy stays between 89-97% because owners are forced to reduce rent in order to keep tenants from moving in the bad years. Remember, vacancy rate is far different from income.
As for "keeping rent increases to 5% per 5 years for people over 65"? So, after inflation and capital costs, owners should loose 2-4% per year?

Finally, look at the charts. What did everyone do with the extra income for the 10 years income went up 3.5% per year and rents won't up 0%? I think rented got used to the extra cash and don't want to give it up now that rents are finally increasing. The numbers clearly show that even with the recent increases, renters have more disposable income than they did in 2000.
Yes, I am sure there are exceptions, however if we are going to use "real facts" as base line numbers, let's be consistsnt and not cherry pick the facts.
There are 4000 residents in Alamaeda that are getting low or no cost housing and there are other programs out there as well. Please don't try and turn landlords into social programs. We pay more taxes than just about anyone else on the island and we pull our own weight. Try and manipulate the rental market and you will end up with the surrounding city's low income tenanta who never move or spend money in your local businesses. That will do nothing but kill Alameda.
Expanding the City's affordable housing supply and more federal section 8 funds will do much better for all those in need.

Submitted by Doug (not verified) on Sun, Dec 14, 2014

And also, above the comment above, if this is about "have and have not's", then just come out and say that, don't vilianize all landlords.

Submitted by Flynn (not verified) on Sun, Dec 14, 2014

I'm a stock broker and many of my clients also invest in real estate either through direct ownership or through REITS. In 2008 the stock market fell by 50%. Limiting the rent increases to less than fair market would be like me telling my clients that I can only allow them gains of 2%-3% per year even though they have huge losses.

Silly, but that exactly what you are saying to landlords, "hey, too bad rents didn't increase at all from 2000-2010 (and went down) and you had to absorb all the 30% (not even compounded) in inflation increases, but you can't make that up more than 5% per year". It would take 20 years to make that loss up after you deduct current inflation and well, let's be real, the market only goes up for 3-5 years before it falls again (look at the history). So in reality you can't prevent people from demanding lower rent when the market is bad, but you want to limit the increase when it's good..?

I know many of you feel renting gives you entitlement, that is not the case. It's the hard working owners that invested their hard earned, taxed money into Alameda real estate, why you even have a place to rent. They are entitled to make a fair return on their investment, especially considering the huge risk they are taking by owning real estate in such an active earthquake area.
Saying rents are up 18% in one year does not tell the true story, maybe you should publish the full story so everyone understands the truth. What if all the landlords sold their homes and condos and the multi family units were knocked down to make for sale condos and all the rental stock went away? That's exactly what investors will do if the return on rents is not equal or greater than selling. We have a lot of old building in Alameda that are ripe for repositioning and if renting is not the highest and best use, they will be converted into for sale units and they have every right to do so.

I agree with the post earlier, if low income need help, use the resources that our tax dollars pay for, don't force it out of good business people of Alameda. With 25% of current renters already getting low or no cost rent, what more do you want...75% or 100%?

Submitted by Michele Ellson on Mon, Dec 15, 2014

Hi Doug/"Jeff": Before things get too much further along here, I'd like to explain why I think the 35% income increase figure is misleading and why I didn't use it in the story.

First, the number is based on two different sets of numbers - the 2000 Census and the American Community Survey, which if you're using the number I think you're using is based on five years of data. It's not an apples to apples comparison. Second, the data you are using includes homeowners and renters alike, so it's impossible to say whether renters truly saw that kind of income increase or not.

Third, and perhaps most importantly, the data only measure what then-current Alameda residents' income is at a point in time. They do not follow the same cohort of people over time. So someone could use the same data (possibly also incorrectly) to say people with lower incomes were pushed out of Alameda due to rising rents from 1999-2000 (23 percent increase in market rates, and remember 2000 Census is 1999 incomes) or from 2010 to now, and replaced with wealthier people who could afford them.