Dot-bomb creates rent meltdown
By Michael Liedtke
Associated Press
SAN FRANCISCO — Hammered by a high-tech bust that shrank incomes and lengthened unemployment lines, Silicon Valley apartment rents dropped 22 percent during 2001, the biggest change in the Western states, according to a real estate study obtained yesterday by The Associated Press.
The average monthly rent for an apartment in Santa Clara County — the Silicon Valley's heart — stood at $1,507 in the fourth quarter, down from $1,935 a year earlier, according to RealFacts, a Novato-based firm that surveyed 6,000 apartment complexes in 19 major markets west of the Mississippi River.
The San Francisco Bay area was the only major Western region market where average rents fell in 2001, although the increases weren't significant in most other regions, according to the study.
RealFacts said average rents in 2001 fluctuated by less than 4 percent in every major market outside California except Seattle and Oklahoma City, where rents climbed by 4.1 and 4.5 percent, respectively.
The about-face in Santa Clara County's apartment rents — adding up to an average annual saving of $5,136 in housing costs — illustrates the severity of a high-tech downturn that has trimmed the paychecks of many Silicon Valley workers and left a growing number without jobs.
The fallout also depressed rents in two other tech-driven markets — the San Francisco metropolitan area, where average monthly rents fell to $1,738, down 15 percent from the prior year, and the Oakland metropolitan area, where rents dropped to $1,269, down 8 percent.
Even with four consecutive quarters of declining rents, the three-county San Francisco metro area remains by far the most expensive market in the western United States, RealFacts said. Santa Clara County and the two-county Oakland metro area are the next most expensive.
Los Angeles County, where 2001 rents rose 4 percent to $1,220 per month, is the region's most expensive market outside the San Francisco Bay area, RealFacts said.
The Sacramento metropolitan area — home to California's original gold rush in the 19th century — emerged as the West's hottest rental market during 2001. Rents in the three-county market 90 miles east of San Francisco averaged $843 per month in the fourth quarter, a 10 percent increase from $769 in the prior year.
The next-strongest market was at the other end of California, San Diego, where fourth-quarter rents averaged $1,079 per month, a 5.5 percent increase from the prior year.
The high-tech employment meltdown is driving many renters out of the area, with some fleeing to less expensive markets such as the Sacramento metro area, where December's unemployment rate of 4.1 percent remained unchanged from the prior year.
