East Bay Area rents follow job growth

Link Corkery has been tracking Bay Area job growth for over two decades. His findings have been the subject of many of his RHANAC articles and analysis. We have found that by studying the trends in employment we can predict movement in the rental market.

The Change in Rents vs. Employment graph shows that in 2002 the rental market in San Francisco bottomed out and began to reverse its trend after the .com bust. We can see that as the job market began to recover on both sides of the Bay rents followed.

Please see the most recent Job Growth graphs (left and below).

The more closely we study job growth on both sides of the San Francisco Bay, the more a correlation emerges. Link predicted when rents began going up in 2005 and in November 2008 he accurately predicted that rents would peak in 2008. In November 2009 he predicted that the East Bay rental market was currently going through the worst of the downturn and would soon start a recovery.

Link’s simple formula is “Rent growth follows job growth.” We will post the monthly job growth graph on our website and you are invited to visit and follow the progress of our rental market as it follows the jobs market.

Looking forward, we expect to see a recovery in job growth, not into positive territory but a reduction in job loss through 2010. Once job growth shows signs of a steady climb we will call the bottom of the apartment sale market, an indication to buy into the apartment market in order to capitalize on trailing cap rate reductions.