After showing some signs of sluggishness in the fourth quarter, Silicon Valley apartment rents resumed their upward trajectory in the first three months of the year, according to the latest figured released today from RealFacts.
The closely watched report from the Marin County-based apartment tracker shows Santa Clara County rents increased $44 from Q4 2013 to Q1, to $2,197 a month. Apartments in Q1 were up 10.2 percent year over year.
Today’s report is significant because there was some question among apartment industry observers whether rents would continue to flatline. In Q4, rents barely budged. And some experts wondered whether the unprecedented apartment construction, which is adding thousands of units up and down the Valley, was beginning to affect prices.
“The surprise is it’s still continuing to go up,” RealFacts’ Nick Grotjahn told me this afternoon. “You would think that it would start to flatline. A lot of units came online last quarter, and more in first quarter of this year. I thought maybe operators would begin to pull back, but it doesn’t appear to have happened.”
In the city of San Jose, the average price of an apartment (for all unit types) was $2,066 in Q1. That is up from $2,022 in Q4 and up 10.3 percent year over year.
A studio apartment in San Jose is now $1,503, the first time the no-bedroom unit type has crossed the $1,500-a-month threshold.
In Palo Alto, average rents for all apartment types were $3,035, up 15.1 percent from a year ago. A studio will set you back $1,905, up 12.3 percent YoY, and the first time the price point has crossed $1,900 a month.
Mountain View saw average rents at $2,412 a month, up 12.4 percent YoY. A studio there? $1,693. Sunnyvale average rents were $2,170, up 10.1 percent. There, a studio takes $1,522 out of your monthly budget.
RealFacts surveys apartment communities of at least 50 units, so your mileage may vary when it comes to comparing these numbers with your own.
Despite the strong rent numbers in Q1, occupancy did decline a bit in San Jose and the county. That could be a sign that rents will moderate.
In San Jose, occupancy was 92.2 percent in Q1, down from 93.1 percent in Q4.
“That’s because of all the new stuff coming online,” Grotjahn said. “If you take out projects in lease-up mode, you might not see that big of a decline.”