Falling Home Sales Spur Rising Rents Across West

Apr. 19 - KGO (KGO) -- The Bay Area home sales market may be in a slump, but apartment costs are on the rise., especially in the heart of Silicon Valley where rents are rising faster than anywhere in the country.

With more people leasing instead of buying, landlords have been able to raise rents more easily. Also, robust job growth equals more means to rent.

In San Jose, the apartment vacancy rate hovers around 3-to-4 percent with the average apartment rent around $1500.

This region of the South Bay is a perfect example of increasing demand leading to rising rents. It's all about supply and demand.

San Jose represents just one of more than a dozen western U.S. markets with climbing rents. Apartment demand is especially intense in Silicon Valley, where the technology industry has rebounded from the dot-com bust, and home prices remain among the nation's highest.

Residents of San Jose, along with other Bay Area and west coast cities, are leasing more, triggering some of the highest-rising apartment rents.

People have been discouraged from buying real estate -- the deepening slump in home sales is eroding property value and a rise in foreclosures is prompting lenders to tighten their mortgage lending standards.

According to Novato-based Real-Facts, which tracks apartment industry trends, this year's annual rent increases range from 2 percent in Sacramento to the spikes of 12 percent in San Jose and 7 percent in the Los Angeles region.

The west's most expensive rental market remains L.A.. and Orange Counties, which average $1588, 7.2 percent higher than last year.

Until the housing market settles more, it may continue to be a landlords' market.

In the Bay Area, San Jose is certainly not alone -- San Francisco, Marin and San Mateo counties also rank as some of the nation's least affordable areas for renters.

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