Today Forbes released its ranking of the best and worst markets for renters, and whaddaya know, three of the top ten are in the Bay Area. San Francisco comes in first (by which we mean dead last), with a 12.8 percent increase in average monthly rent over the prior year (yeah, that sounds about right), trailed by Oakland at No. 2 and San Jose at No. 3. Our perennial rival in unlivability, Manhattan, comes in fourth, followed by Los Angeles. Because Forbes looked at metropolitan statistical areas (MSAs), San Francisco's data includes San Mateo and Redwood City, whose presence no doubt lowered our metro's average monthly rent, which sat at a combined $2,802 at the end of the fourth quarter of 2014.
Forbes collected data about the 50 largest MSAs from Encino-based real estate investment firm Marcus & Millichap and ranked metros according to the average rent during the last quarter of 2014, vacancy rates, average share of income spent on rent, and year-over-year change in rents. San Francisco's low, low apartment vacancy rate of 3.6 percent helped snare us the lead. According to Forbes' data, the median household income at the close of 2014 was $85,087, and renters were on average spending 40 percent of their income on rent, coming in higher than LA's also notoriously difficult rental market by just one percentage point. Meanwhile, the average monthly mortgage payment stood at $5,851, making it cheaper to rent.
In Oakland (whose MSA includes Fremont and Hayward), average monthly rent at the end of the fourth quarter reached $1,815, a 10.5 percent increase over the prior year. Renters were spending a more sustainable percentage of their income on rent—28 percent—but the apartment vacancy rate was even lower than San Francisco's, at 2.9 percent.
And in San Jose (whose MSA includes Sunnyvale and Santa Clara), the average monthly rent in the fourth quarter stood at $2,291, an 11.3 percent rise over the same time in 2013. Median household income was higher than in both SF and Oakland, at $93,902, and renters were spending a reasonable 29 percent of their income on rent. The vacancy rate, at 3.5 percent, was comparable to SF's.
Forbes blames San Francisco's notoriously low housing production, of course, despite our recent gains and all.
· Best and Worst Markets for Renters [Forbes]
· Yikes, Rents in SF Went Up Yet Another 13.4 Percent in 2014 [Curbed SF]
· Yikes: SF Closes In on a Year of Median Rents Topping NY's [Curbed SF]