(May/2010) … March 2010 was the first time in 23 months that the San Francisco side of the Bay added jobs, according to California’s Employment Development Department (EDD). Past articles in this column have proven how important San Francisco is to the rental economy in RHANAC’s service area which includes Oakland, Berkeley, Alameda and Emeryville.

If the San Francisco/Peninsula area continues to add net jobs this should mean a pick up in their rental market and since there appears to be about a six month delay before rental trends hit the East Bay look for more signs of strengthening in our rental market later this year.

Rental Market and Sale Market

(March/2010) … For the past few years this column has been following the apartment market on its way down. Although it did not collapse like the 1 to 4 unit market, nonetheless it has been grinding down to a near standstill.

A recent column noted that the worst of the rental market decline may be behind us and that cap rates on apartment building sales have been heading up, which pushes prices down. We may be approaching a point in time where there is a convergence between the rental market and the sale market and when that convergence occurs, that will be the bottom of the apartment market and the time to start buying.

Hope on the Horizon

(November/2009) … As 2009 wound down, rental property owners found themselves in a particularly rough rental market as vacancy rates had risen and rents had fallen. But, rejoice: the worst is over. Just as I predicted that rents would peak in 2008, I am predicting that we have gone through the worst of the pain inflicted by this rental slump. The recovery in the rental market will begin shortly but it will not feel like much of one; rents will continue falling through 2010, just not as much as in 2009.

What a decade it was. The apartment market zoomed to great heights in the middle of the decade only to seemingly grind to a halt as the decade recently ended. Luckily it did not crash and burn like the 1 to 4 unit market but the slowdown in activity has been dramatic. Cap rates posted an impressive string of six consecutive annual declines from 2000 to 2006, hitting a low of 5.26%, followed by an ominous three year run-up through 2009 which shows no signs of letting up. As the jobs market deteriorated in 2008 the rental market finally succumbed in 2009 forcing many owners to lower rents at the same time cap rates were going up, resulting in a softening of apartment prices. 2010 looks to be more of the same as the apartment market does not seem to have hit bottom yet, according to several owners interviewed for this article.