The stumbling economy has brought good news to Berkeley apartment dwellers. Although hard numbers are difficult to find, it appears that rental rates are dropping in the city at the same time home prices have been tracking upward.
The best figures come from UC Berkeley’s Cal Rentals, a service which lists rentals suitable for students.
“Landlords I’ve talked to say that local vacancy rates are between five and seven percent, the highest in the many years I’ve been working here,” said Cal Rentals Director Becky White.
“2001 was definitely the peak,” she said. “Now landlords will list their units at one price and then knock them down until they can find tenants.”
White’s figures show studio apartments peaking in June, 2001, at $1,102 per month, dropping to a low of $744 in September, 2003, while rising to $852 this February.
One-bedroom apartments peaked at $1,375 in July 2001, dropped to a low this January at $1,064, and rose again slightly to $1,080 in February. Two bedroom units peaked in July 2001 at $1,822 and dropped to a low of $1,356 this February.
Link Corkery, a real estate broker who chairs the Market Conditions Committee of Rental Association of Northern Alameda County, said apartment vacancy rates have soared from less than one percent in 2000 to seven percent last November.
Corkery surveyed vacancies in 2,100 apartments in the region. While his survey was heavily weighted toward Oakland, with a vacancy rate of 7.3 percent, he said Berkeley landlords reported vacancies of 4.9 percent.
Berkeley vacancy rates appear to have stabilized, Corkery said, with most owners reporting they are “treading water.”
According to figures compiled by RealFacts, a commercial service that tracks privately developed, non-subsidized apartment complexes of 50 units or more in the San Francisco Bay Area, the rental costs per square foot for apartment rents throughout Alameda County dropped from $1.81 to $1.16 between Jan. 1, 2002, and Sept. 30, 2003, a 36 percent drop.
During the same period, county large building occupancy rates actually increased from 93.9 percent to 95 percent.
RealFacts Director of Marketing Gerald Cox said there were few hard numbers for Berkeley, because most large apartments in the city were university-owned, built with public funding, or contained subsidized units for low-income residents. As a consequence, RealFacts tracked only three complexes in the city.
In the greater Bay Area, Berkeley’s large complex rental average of $1,776 ranked near the top of a range that ran from a low of $885 (in Glen Ellen) to the peak of $1,999 (in Menlo Park).
The overall decline in apartment rents parallels declines for office, retail and industrial leases—although across the board drops were less in the East Bay than for San Francisco and San Jose, according to figures from EDAB, the Economic Alliance for Business, an East Bay consortium of businesses and local governments.
EDAB figures also show that sales prices for apartment buildings have also taken a hit—by 26 percent in San Francisco and 27 percent in San Jose between Jan. 1, 2001, and Sept. 30, 2003, reflecting sharp drops in employment. The East Bay decline was smaller, at 17 percent.
In the same period, sales prices for homes rose less than one percent in San Jose and about five percent in San Francisco, while East Bay homes were selling for nine percent more by the end of the same period.
Rent figures are especially significant in Berkeley, because figures compiled for the 2001 update of the Housing Element of the Alameda County General Plan place Berkeley with the county’s third highest percentage of renters—61.8 percent—trailing only Oakland (62.5 percent) and Emeryville (89.9 percent). The countywide rental rate was 48.5 percent. Piedmont boasted the highest percentage of home ownership at 90.5 percent.
A 2001 two-year study by the League of Women Voters of Berkeley, Albany, Emeryville (LWV), highlights another Berkeley anomaly. While Berkeley homeowners have higher incomes than the countywide mean ($64,939 versus $58,894), Berkeley renters earn considerably less than average ($24,557 versus $39,410).
An additional factor complicating Berkeley’s apartment scene is the University of California, which is the city’s largest landlord.
The university will be opening units designed to house an additional 2,000 more students by the fall of 2005, according to Kathleen Quirk of the university housing office. That will bring the total UC student occupancy rate to 7,200. The increase will probably exert additional downward pressure on rents in private apartments, according to a spokesperson for the Berkeley Property Owners Association.
Another indication of the soft rental market came last October when the city Rent Stabilization Board denied rate increases to apartment owners covered under the city’s rent control ordinance. The vote was only the second in the board’s 22-year history to deny any increase to landlords.
The ruling does not apply to single-family home rentals or new construction. ›