Bay Area Rent Prices Still Rising in 2022, According to New Report

Summary: A March 2022 report from Realtor.com showed a double-digit increase in rent prices in the Bay Area. The median rent for the San Francisco-Oakland-Hayward metro area climbed 12.1%, year over year.

We’ve heard a lot about the rapid rise of Bay Area home prices over the past year or so. And it’s true. We’ve seen unprecedented price growth within the local real estate market. But there have been substantial increases on the rental side, as well.

In fact, the median rent for the San Francisco-Oakland-Hayward metropolitan area rose by double digits over the past year or so. That’s based on a recent report from Realtor.com.

Rent Prices Are Rising Nationwide in 2022

This week, the research team from Realtor.com published a report with rental market data for the nation’s 50 largest metro areas.

Among other things, this report showed that rental prices are rising in most of the country. In February 2022, rents nationwide rose by 17.1% compared to the same month a year earlier. That represents 30% of household income.

According to Realtor.com’s chief economist Danielle Hale:

“Whether it’s rent or mortgage payments, the general rule of thumb is to keep monthly housing costs to less than 30% of your income. And with rents surging nationwide, February data indicates that many renters’ budgets may be stretched beyond the affordability limit.”

This report also reinforced something we already knew. The San Francisco Bay Area is one of the less affordable rental markets in the country, when measured against income. The above-mentioned report showed that renters in the Bay Area spend about 30.5% of their income on rent (on average).

But we’re not the least affordable rental market. That dubious distinction went to Miami and Los Angeles, where a typical renter might spend more than 45% of their income toward monthly rent costs.

Bay Area Rental Costs Up 12%, Year Over Year

But what about here in the San Francisco Bay Area? What are rent prices doing in 2022? As it turns out, rental costs are climbing steadily as of spring 2022 — though not as fast as home prices.

The Realtor.com report showed that the overall median rent for the San Francisco-Oakland-Hayward metro area rose by 12.1% year-over-year. The overall median rent (which includes all sizes of residential rental properties) rose to $2,970 in February 2022.

The median monthly rental cost for a studio-sized apartment rose to $2,355 in February, an increase of 17.9% over the previous year.

Interestingly, Florida posted some of the biggest increases in rent prices over the past year. Both Orlando and Tampa experienced a rental price increase of more than 30% from February 2021 to February 2022.

Home Prices Are Still Climbing As Well

It’s not just rental costs that are rising. According to Zillow, the median home value for the San Francisco Bay Area rose by around 19% over the past year. This was reported in late March 2022.

Looking forward, many economists are predicting that home-price growth will begin to slow down later this year. It’s hard to say whether the same will happen for rent prices in the Bay Area. But as of right now, rental and purchasing costs continue to rise.

Related: Will home prices drop in 2022?

Controlling Your Housing Costs with a Mortgage

There are pros and cons of renting a home in the San Francisco Bay Area. The main advantages are that you have less maintenance and don’t have to worry about selling the property when you move.

But there are downsides to renting as well. In many cases, Bay Area renters tend to have less control over their monthly housing costs when compared to home buyers. This distinction becomes even more important when rents are rising, as they’ve done over the past year.

When buying a home, buyers have the option to use a fixed-rate mortgage loan. As the name suggests, this type of loan keeps the same interest rate for as long as the borrower holds the loan. This gives homeowners a greater degree of control over their monthly housing costs.

When renting a Bay Area home, on the other hand, you might not be able to avoid annual increases in your rental costs. It’s something to consider when weighing the buy-versus-rent decision.

Granted, homeownership is not for everyone. For instance, people with tight budgets or those who don’t plan to stay put for long might be better off renting versus buying.

But for a lot of people, buying a house in 2022 might make more sense than renting. The ongoing rise in Bay Area rent prices underscores this idea.

Need a mortgage loan? Bridgepoint Funding has been meeting the needs of Bay Area home buyers and homeowners for nearly 20 years. Please contact us if you have mortgage-related questions or would like to apply for financing.