Nearly half the renters in the Bay Area struggle to meet high housing costs, despite an influx of wealthier workers into the market, a new survey found.
A study by Apartment List, a rental website, found nearly 1 in 4 renters in San Jose, San Francisco, Oakland and surrounding areas were severely cost burdened, spending more than half of their income on rent. About half of Bay Area renters are considered economically burdened, spending over 30 percent of their paychecks on shelter.
But the region’s record-setting housing prices are forcing high wage earners into the rental market, too. Real estate agents and researchers say wealthier clients in the Bay Area are choosing to rent because they can’t afford to buy. Even well-paid young tech workers are finding it hard to break into a housing market where the median single family home price is $775,000.
“Rents are out of control. Everybody knows that,” said David Hunt, operations manager for property management company WA Krauss. But few prospective renters have trouble meeting income qualifications for their 450 rental properties around the Bay Area, Hunt said.
“There’s a lot of money here,” he said.
San Jose is one of a handful of cities across the country seeing more cost-burdened renters over the last decade, said Sydney Bennet, researcher at Apartment List and author of the study. “San Jose is really feeling the impact of the rent crunch,” she said.
Average rents have continued to surge, growing up to five percent over the past year in some cities. In San Jose, a one-bedroom goes for $2,050 and two bedroom for $2,570. In Oakland, the typical one bedroom costs $1,780 and a two-bedroom costs $2,240. And in San Francisco, the average rents are $2,450 for a one-bedroom and $3,080 for a two-bedroom, according to Apartment List.
The survey is the latest to spotlight the housing pinch on renters in Silicon Valley. Researchers at UCLA found that nearly 80 percent of residents in the San Francisco metro area earning under $50,000 are spending more than 30 percent of their income on rent.
The Apartment List study considered income and rental costs when calculating an index of affordability. Among the top 100 metro areas in the country, San Jose was ranked at 51 and San Francisco at 30 for affordability, reflecting the Bay Area’s strong economy and higher salaries.
But that doesn’t tell the whole story, Bennet said. Lower income renters have been forced to leave the region for cheaper cities and states, she said. Others are leaving apartments to return to family homes.
California and Florida have the highest percentage of renters paying more than 30 percent of their paychecks for shelter. Los Angeles and Miami ranked near the bottom of the index for affordability.
The study also found the share of cost-burdened renters has soared over generations. Just one-quarter of U.S. residents paid more than one-third of their income to rent in 1960; that percentage is now nearly 50 percent.
Among the most affordable places to live include Ogden, Utah; Pittsburgh and Kansas City, according to the survey. Several California cities were deemed the least affordable for renters, including struggling metro areas of Oxnard and Fresno.
Jeff Barnett, vice president of Alain Pinel Realtors, said the Bay Area rental market has flattened out recently, but still stretches the budgets of many new residents. Rental prices are so high, he said, that some families may be better off reaching a bit to buy a starter home or condo.
“You have to be a little more creative, and save a little more money,” Barnett said. “It’s one of the most beautiful places in the world, but we pay for it.”
A ranking by Apartment List found the most affordable metro areas in the country for renters…
1. Ogden, Utah
2. Harrisburg, Pa.
3. Raleigh, N.C.
4. Pittsburgh, Pa.
5. Kansas City, Mo.
…are not in California
30. San Francisco (including Oakland)
51. San Jose
95. Los Angeles