Rental rates in Berkeley’s newest apartment buildings have stagnated for the first time in two years, according to a report released Jan. 21 by RealFacts, a Bay Area real estate consulting firm.
While the falling prices show moderate improvement in rental costs in the short run, housing rates in Berkeley are still about six percent higher than they were at the same time last year.
The period spanning the last three months in 2012 was the first time in two years that rent has not increased in nine of the city’s largest apartment buildings, according to the report. Rental rates in the Bay Area stagnated or even fell slightly in the last few months, according to the report by RealFacts, a consulting firm that tracks rent in apartment complexes of 50 units or more in the Bay Area.
“People feel the economy is coming back, so the for-sale housing market is coming back, and that’s taking away some of the potential demand of renters,” said RealFacts spokesperson Nick Grotjahn.
Berkeley apartment rents have been slowly increasing, according to a report compiled by the city of Berkeley. At the end of 2002, a two-bedroom unit cost an average of $1,650 a month. The going rate for a same-sized unit averaged $1,995 per month at the end of last year.
“Rents have escalated over the past decade, and so now, when all these newer buildings are coming on the market, the rents are so high,” said Councilmember Jesse Arreguin. “Even though rents may have decreased slightly, it is still incredibly expensive and cost-prohibitive.”
Still, the report may underestimate the city’s rental prices, as it excludes Berkeley’s newest housing development, the Arpeggio Building at 2055 Center St., which opened only last fall.
The building’s market-rate units, most of which are priced between $2,000 and $3,500, would have instead showed an increase between the third and fourth quarters had they been included in the data.
The opening of new apartment buildings offers students more alternatives to residence hall living and has the potential to stagnate market rates.
“There are newer and more products coming online that are absorbing some of the rental demand,” Grotjahn said.
In 2010, a period of steady decline in Berkeley rental rates followed the opening of two new Berkeley apartment complexes — Fourth & U and the New Californian.
“There is an increase in demand, even in this current economic climate, and apartment prices are at some of their all-time highs “ Arreguin said. “When we factor that into tuition increases, student fees, books — it’s expensive for students to go to school at UC Berkeley.”
Megan Messerly covers city government. Contact her at [email protected]