(Read more on the multifamily market.)
SAN FRANCISCO-The apartment market in the Bay Area should continue to thrive amid a slowdown in the for-sale housing market, according to Delores Conway, director of the Casden Real Estate Economics Forecast within the Lusk Center for Real Estate at the University of Southern California. Conway made her prediction Wednesday as part of a presentation at the Pacific Coast Builders Conference taking place this week at the Moscone Center.
"The apartment market is very strong, occupancy is up and rents are increasing," Conway tells GlobeSt.com. "As long as there is no recession and no major shock, I think it's going to continue to be strong because job growth is steady."
The apartment market is recovering nicely in large part because the for-sale housing market has slowed down due to stricter regulations on who can qualify for home loans, Conway says. The ensuing lack of buyers for the lower-end of the market has put increased demand on an apartment market that lost inventory as apartments were converted to condominiums and new development was weighted toward mid- to high-end condominiums instead of apartments.
The result has been high occupancies and spiking rents, which is causing apartment owners to hold onto their properties. In San Francisco proper, average occupancy now exceeds 97% and monthly effective rents have increased 7% in each of the past two years, Conway says. In San Jose, average occupancy is in excess of 97% and average effective rents rose 7.8% in 2005 and 10% last year, marking the highest rent increase in the US. Rents and occupancies are also on the rise in Contra Costa and Alameda counties on the eats side of the Bay, she says.
"We're in a housing slowdown but as long as we continue along with reasonable growth the Bay Area apartment market is going to do fine," she says. "It's just a very desirable place to live."
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