Marin rental prices rebound after pandemic slows

Rental prices in Marin are more than 6% higher than in the fourth quarter of 2019, before the start of the COVID-19 pandemic, according to industry analysts.

The average monthly rent in Marin complexes of 25 or more apartments is $ 2,683, said CoStar Group, a paid provider of data and marketing services to the commercial real estate industry.

Rents vary by location. CoStar estimates the average monthly rent at $ 2,846 in Mill Valley, $ 2,298 in San Rafael and $ 2,246 in Novato.

“There is currently a huge demand for apartments,” said Joby Tapia, investment advisor at NAI Northern and secretary of the Marin Rental Property Association. “The only places that are struggling to regain pre-pandemic rents are the inner city areas. “

Jay Lybik, a CoStar analyst, said apartment rental prices in larger complexes are more representative of the market than smaller mom and pop apartment buildings.

“Moms and dads tend to manage their properties more based on occupancy than rent,” said Lybik. “It’s a very different business plan from that of large investors and institutional investors. “

CoStar data shows that after increasing 2.8% year-on-year in the fourth quarter of 2019, Marin’s rental price growth slowed during the pandemic to 0.5% in the second quarter of 2021.

Rental price growth remained at or below 0.7% per month year over year until the first quarter of 2021.

Rental prices, however, jumped 4.4% in the second quarter and are up 5.8% since the start of this year.

“Overall, Marin’s rental market has weathered the pandemic very well,” said Lybik, “and will continue to do well until 2022.”

CoStar predicts that Marin’s rental prices will increase a further 6.6% in 2022.

“It’s going to remain difficult for tenants to find available units,” said Lybik, “because the vacancy rate is so tight. “

Marin has a vacancy rate of 3.3%, and CoStar predicts that the rate will drop further to 2.7% by the end of 2022.

Michael Burke, a Greenbrae agent at Golden Gate Sotheby’s International Realty, said: “The vacancy rate has been declining since the second quarter of 2020, when it was 4.8%. Going forward, the key indicator to watch is the vacancy rate.

Burke said rents for three-bedroom apartments in Marin rose 5.4% in the third quarter, faster than rents for smaller units. Rents at Marin Studios fell just over 3% in the third quarter.

“This could be a reflection of the fact that people are having difficulty buying homes due to lack of inventory,” Burke said. “They have to rent.

Lybik said that in other parts of the Bay Area – such as San Francisco, San Jose and East Bay – rental prices have come down during the pandemic.

He said rents in San Francisco remained below pre-pandemic levels. The city’s average asking rent is $ 2,921, up from $ 3,063 in the fourth quarter of 2019.

Lybik cautions against drawing too many conclusions when comparing Marin’s multi-family rental market with that of San Francisco or other larger communities. He noted that the inventory of apartments in San Francisco is 10 times greater than the 14,000 apartments in Marin County.

Lybik said the country’s spiraling inflation rate is more a consequence of rising rents and other rising costs, rather than a cause of higher rents.

Burke said if inflation remains high, it could allow Marin landlords to raise rents faster than they otherwise could next year.

Indeed, Assembly Bill 1482, which came into force in January 2020, limits annual rent increases to no more than 5% plus the local inflation rate, or 10%, whichever is lower. both. The inflation rate used for the calculation is updated annually in April. Last April, the inflation rate was 3.8%, so the maximum California homeowners could raise their rates in 2021 was 8.8%.

Burke said AB 1482 has decreased the sales value of rental properties owned by mom and pop landlords who have generously kept rents low in the past for the benefit of their tenants.

“I find that more and more when I have a building for sale,” said Burke. “A number of rents are so low that it will take 10 to 15 years for someone to put them on the market.”