COLUMN
market outlook
13.4% growth year to year. Oakland was second behind Denver with 12.1% yearto-year rent growth and San Francisco third with 11.6%. While San Francisco has passed policy last year to address the Airbnb and short term rental issues, Oakland and Berkeley have not. In fact, San Francisco is proposing tougher regulations on short terms rentals because so few participants actually registered their rentals with the City. Given that San Francisco passed rent control before Oakland and Berkeley, I suspect short term rental regulation is coming to the East Bay. It’s too tempting Oakland continues to lead for both price to find another way to regulate housappreciation and rent growth. BY GRANT CHAPPELL ing, create a new agency/department and generate fees. I hear more and more about owners resorting to short term rentals as a way to avoid rent control. In many cases, the cash flow can be higher, even with a higher vacancy factor and more turnover. An owner’s inclination to go with short term rentals could be an understandable response to long term pains of rent controlled apartments. Cory Weinberg, a real estate writer for the Business Times, has reported on both political factors and local opposition to development in San Francisco and the East Bay. In a recent article titled, “Why Housing Protests in San Francisco he East Bay market continues to and Oakland Annoy Urban Planning economic factors caused them to pull attract new capital as yields in Chiefs”, he laid out balanced views from back. Over the past year, the 10-year other Bay Area markets fall to all parties. Without developers paying bond has seen lows of 1.67% and highs historic lows. Alameda, Berkeley and fees to start construction, revenue to the of 2.65%. Even though 30-year rates on Oakland posted gains in one or more city is lower for public services. Growth 30-year fixed mortgages had risen to a metric: total dollar volume, average in housing over time puts downward 7 month high at the submission of this sales price, price per square foot and pressure on rents. Even if both sides of article, rates on 3, 5, 7 and 10-year fixed price per unit in Q1 2015. In some the aisle agree more housing is needed, loans for 5+ unit products remain as cases, the results were impressive. As the process is painstakingly slow. This competitive as ever. most are aware, the San Francisco Bay greatly benefits owners of existing rental Nationally, Oakland continues to Area has become one of the most unafproperty as it pushes asking rents up, take position in the top residential real fordable areas in the world to live. Rent and ultimately property estate markets for both growth continues to outpace most mar“An increase in values. price appreciation and kets nationally. Overbidding and cash Yet with recent rent growth. According to interest rates, offers are the norm in the single family softening in rents, protests both in San a recent report by Zillow, world, and the investment market is more political Francisco and Oakthe San Francisco Metro becoming equally competitive. regulation and land, including a group Area led the country last In the financial world, the Federal compliance costs of protesters who year with 14.9% increase Reserve has again left short term rates could alter market physically shut down an in rents from January unchanged at zero. For a few weeks, conditions in a Oakland City Council 2014 to January 2015. many anticipated The Fed to make relatively short meeting over a vote for The San Jose Metro Area some move in raising rates, but mixed period of time.” approving a site for 298 took second place with
Impressive Results in East Bay Market
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10 RENTAL HOUSING
| JUNE 2015 |
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