Rental markets in the Bay Area that had slowed down in recent years are getting hot again with Silicon Valley recording the steepest increase in rental demand nationwide, according to a new report by RentCafe.
The report analyzed data from multifamily properties in 134 largest markets across the nation. The report concludes the overall housing supply can’t keep up with demand.
Silicon Valley’s competitivity score grew by a staggering 46 points since the start of 2022 — from a modest 22 to a robust 68 — placing it 27th in the RentCafe's overall point ranking system. The area’s rise in popularity was mostly fueled by high home prices and a lack of new apartments as remote workers slowly return to tech-driven cities like Palo Alto, Menlo Park, Cupertino, Sunnyvale and Mountain View, the report notes.
Additionally, significantly fewer apartments opened throughout Silicon Valley compared to one year prior (due to a 2.1% drop in new construction year-over-year). Therefore, an average of 11 prospective renters competed for each vacant apartment, which was occupied within 35 days, according to the report.
Other data from the report:
- In early 2023, Silicon Valley’s competitivity score rose by 46 points year-over-year, with 11 renters competing for a vacant apartment amid a lease renewal rate of 45%.
- San Francisco shows a slower pace of attracting residents, with a competitivity score of 15. Faced with an occupancy rate of 92.4%, 6 prospective renters compete for each vacant unit in the area.
- East Bay stands somewhere in between, with a competitivity score of 44. Here, 9 renters compete for a vacant apartment.
- Nationwide, each vacant apartment attracts 8 prospective renters and gets filled in a little less than 6 weeks.
A combination of factors including rapid inflation, interest rate hikes, high home prices, and increased costs of living are pushing many renters to reconsider their housing options, including apartments, according to the study.
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