Single-family home rentals outpace apartments in some Bay Area cities.
In a surprising twist, the number of single-family homes for rent increased faster than the number of apartments for rent in three large Bay Area cities between 2007 and 2016, according to a study by RENTCafé, an online rental listing service.
While the number of single-family rentals in Oakland increased a whopping 41 percent, the number of apartment units for rent edged up only 15 percent, according to the RENTCafé study. In Fremont, single-family rentals increased 36 percent and apartments 25 percent; San Jose single-family rentals went up 32 percent, apartments 22 percent.
This phenomenon is in line with national trends. Single-family rentals grew at a faster pace than apartments in a majority of the nation’s 30 largest cities, the study concluded. For decades, apartment rentals grew faster than single-family rentals, but this shifted between 2007 and 2016.
The same factors that govern these changes nationally are at work in Oakland, Fremont, and San Jose, according to Doug Ressler, director of business intelligence for Yardi Matrix, a division of Yardi, the parent company of RENTCafé.
“Most of the single-family homes going up for rent are not owned by investors, but by mom-and pop people,” small-time landlords who own only one rental property, Ressler said. “They are owned by Baby Boomers who say, ‘I am going to buy another home and I’ll use the rent from my old house to help pay my mortgage on the new place.’”
It’s much easier for an individual to do something like this than it is for a developer to build a new apartment building, Ressler said. “If a large developer tries to build multifamily housing, they meet with opposition from neighbors who fear gentrification. They face a maze of regulations: They have to either build affordable units or pay a sum to the city. All this makes building multifamily housing prohibitively expensive,” Ressler said.
Also, demand for single-family rentals is increasing, according to the author of the study, Nadia Balint of RENTCafé. “While everyone’s been waiting for homeownership to fully regain its pre-crisis strength, single-family rental homes have become ‘Plan B’ for those who are anxious to break out of their apartments and can’t buy a house yet, or have lost their homes to foreclosure, short sale, or financial setbacks,” Balint said in the study.
A little over half of the total number of single-family home rentals on the U.S. market are occupied by married couples and parents with minor children, Balint said.
Although they can cost on average about $1,000 more in monthly rent than an apartment, single-family rentals offer the extra space families need, according to Balint.
It’s important to note that while the number of single-family rentals is growing fast, such rentals still make up only a small part of the market. RENTCafé reported that at the metro area level, both the San Jose-Sunnyvale-Santa Clara metro area and the San Francisco-Oakland-Hayward metro area exhibit only small percentages of single-family rentals.
Apartments currently make up 68 percent and 71 percent, respectively, of the total rental units in these metro areas.
With regard to fast-growing single-family rentals, San Francisco bucked the trend. The city had a 9 percent decrease in single-family rentals and a 14 percent surge in multifamily rentals.
The reason San Francisco has more rental stock coming on the market is that developers are building higher and smaller, Ressler said — something anyone who has driven through the city in the last five years has noted as many tall multifamily buildings take shape.
The units in the buildings are smaller, Ressler said. “In San Francisco, 802 square feet is the average for new multifamily units. In the East Bay, the average is 827 square feet.”