Rents rise, but most stay below pre-pandemic levels

Rental prices rose in 2021 in most of the Bay Area cities where rents plummeted in 2020, but most are still not quite back to pre-pandemic levels. But rents in some areas outside of the city centers have blown well past where they were before the pandemic, according to data on rents for a median onebedroom apartment from the online rental site Apartment List.

Rob Warnock, senior research associate at Apartment List, said the biggest takeaway from the data is “the pandemic has smoothed out some of the price gaps between Bay Area cities.”

“San Francisco and San Jose used to be significantly more expensive than further-out cities, but since 2020, that price gap has shrunk,” he wrote in an email. “Prices in San Francisco and San Jose still sit below pre-pandemic levels, while prices in cities like Petaluma and Santa Rosa and Fairfield are up more than 10%.”

The Bay Area’s rent recovery has been considerably slower than in the rest of the U.S. Specifically along the Peninsula, the Bay Area “is the only remaining region with a large concentration of cities where prices remain below pre-pandemic levels,” Warnock said.

“Most everywhere else, the big cities as well as the smaller suburban regions are all more expensive today than they were at the start of 2020,” he added.

Apartment List includes only cities where there are enough apartment transactions each month to accurately model month-over-month price changes. The company uses data from the U.S. Census Bureau for rent statistics on recent moves and estimates how rents have changed more recently using a growth rate calculated from listing data on its platform.

The data shows that like San Francisco, Oakland saw its rent prices plummet during the pandemic as city dwellers left for the suburbs and areas even farther away. But while San Francisco has seen a notable rent growth rebound of 15% in the past year, Oakland’s rent prices actually decreased by 1%.

Warnock said Oakland is an “interesting case” with its much slower rebound compared with San Francisco and San Jose, which have seen significant growth in the past year.

“It’s difficult to pinpoint exactly why this has happened, but clearly in 2021 new renters have decided not to flock to Oakland at the same velocity as other cities,” he said. “We have to do some more digging to better understand why this is the case, or to what extent it can be attributed (Oakland’s) higher construction rates compared to San Francisco.”

Oakland’s median one-bedroom rent, which was almost $500 more than Fairfield’s in December 2019, was slightly less in December 2021 at about $1,640, compared with $1,660 in Fairfield. Warnock said this “would have been extremely unlikely to occur absent a pandemic.”

Grant Chappell, a broker at real estate firm NAI NorCal, said from his perspective, rents have already rebounded in some areas including around Lake Merritt, north Oakland, Temescal and Rockridge, which has an alluring mix of restaurants, retail and residential.

He said more people are coming to Oakland to prepare to start commuting into work and want to get in when prices are lower, and there will be spillover from college students and professionals who can’t find a place in Berkeley but still want to be close.

On the flip side, areas such as downtown Oakland aren’t recovering as quickly, according to Chappell, because “all amenities that made downtown really attractive aren’t back to where they were pre-pandemic.” He added that he believes rents are still down in some areas with higher crime.

With many new units on the way or in the development pipeline in Oakland, Chappell said he doesn’t expect big increases in rental prices. “To really go higher than pre-pandemic levels will be challenging with all the new units coming online,” he said. From 2018 to 2020, Alameda County built far more units per capita than San Francisco County and Santa Clara County, much of it driven by building in Oakland.

Fremont, the Bay Area’s fourth largest city, differed from its other big city counterparts, rising 2% in 2020 and going up 8% in 2021. Warnock said he suspects Fremont is between the big cities that lost renters and saw rents drop, and smaller cities that absorbed many new renters and saw prices go up.

“On one hand, it’s a place where Bay Area renters can get more bang for their buck compared to San Francisco without moving far,” he said. “On the other hand, it’s still one of the priciest markets in one of the priciest parts of the country. So I think this led to a lot of competing inbound and outbound migration throughout the pandemic that ultimately smoothed out the price changes.”

The East Bay and North Bay continue to be hot rental markets, even as the major city centers recover. Cities including Walnut Creek, Pleasanton and Dublin that are close to BART, and other suburban cities including Concord and Pleasant Hill, all saw notable rent increases from December 2019 to December 2021, and rents now either match or exceed the pre-pandemic values.

“The pandemic encouraged some people to move further away from major urban centers, towards smaller places that can still access the big city but offer more square footage per dollar,” Warnock explained.

Up north, Fairfield’s onebedroom median rent soared 18% from December 2019 to December 2021, and in the past year, rents are up 11%. Santa Rosa saw rental prices increase almost 10% from December 2019 to December 2021, jumping 13% just last year.

Warnock said this has been a trend throughout the West Coast, from the Inland Empire of Los Angeles to the southern and eastern suburbs of Seattle. But it put a lot of pressure on these outlying cities that weren’t prepared for the influx.

“These places weren’t sitting on a massive reserve of vacant apartments, so the sudden wave of incoming renters created extremely high occupancy rates that in turn drove up prices,” he said. “While the initial shock of the pandemic has passed, vacancies remain scarce so we have yet to see any significant cooling.”

Silicon Valley’s cities saw significant rent drops at the start of the pandemic, as many tech companies went remote and workers stayed home. Median one-bedroom rents in Cupertino, Sunnyvale, Mountain View and Redwood City fell from 7% to 11% from December 2019 to December 2021.

But in the past year, those cities saw major rebounds: Redwood City is up 12%, Sunnyvale has increased 15%, Cupertino is also up 15.%, and Mountain View has soared 116%.

Warnock said it’s a combination of people returning to the office and wanting to be near activity.

“While a number of in-person jobs have come back, there’s no question that office activity still lags pre-pandemic levels,” he said. “But cities have more to offer than just proximity to the office, so when rent prices crater like they did in 2020 … there are people eager to take advantage of that discount.”