Homes in the Bay Area are seeing rents increase in the face of a housing crisis that threatens to disrupt the region’s already strained finances.
As rents surge, people are turning to cheaper rental options in hopes of avoiding homelessness.
Rents are climbing at the fastest rate in more than a decade, according to data from the National Association of Realtors, as more than 100,000 homes are being priced out of reach for many of the region and the country’s economy is being challenged by a glut of housing.
The median rent in the San Francisco Bay Area is $1,100 a month, up from $971 in July, according the NAR.
In San Jose, where rents are at their highest level in more that a decade and the median is $3,000, more than 3,000 apartments are at risk of being demolished, according NAR data.
In New York City, where rent is rising at the slowest rate in three decades, the median rent is $2,700, up by more than $100 a year.
The NAR’s data comes amid a national housing crisis, with the Federal Reserve tightening lending standards and banks refusing to lend to developers, even as housing costs remain sky-high and rents continue to rise.
A housing shortage is forcing more and more people to move to places that have less affordable housing, making it harder for those living in poverty to find affordable housing.
New York State, which has the most affordable housing in the nation, is seeing its first-time home buyers, many of them immigrants, make more than twice as much as they did a decade ago.
That could drive prices up further as builders begin to rezone and demolish housing in places like Brooklyn and Queens, according Kevin O’Sullivan, managing director of real estate research firm HVS.
He said the region has experienced a glut in construction over the past few years, leading to a sharp uptick in new listings.
The city has lost more than 1,000 rental units in the past decade.
O’Brien said that, with rents rising, the only way to afford a place in the city is to move out.
“This is going to be the biggest housing crisis in the country,” he said.
“I can’t think of any scenario where you could live in New York without rent.”
While the supply of affordable housing is expected to grow, the demand for housing will likely remain relatively constant, according Mark Bittman, a housing economist at the Urban Institute.
“The supply is going up, the supply is not going down,” he told CNBC.
“But demand for new housing is going down.”
Bittmans data suggests that demand for rentals is expected only to increase in some areas.
In Manhattan, the average rent in midtown Manhattan is $5,100, up more than 5 percent from a year ago, according data from real estate website Zillow.
Prices are also rising in San Francisco and Los Angeles.
“If you look at the average price of a single-family home in the last three months, it’s going up $100 per square foot,” Bittmann said.
In many cases, the rise is a result of increased demand for apartments, he said, including the Bay area.
San Francisco rents are now about double the median income, while prices in Los Angeles are up about 10 percent over the same period, according Zillows data.
“It is going from a very tight supply to an extremely tight supply,” Bizar said.
Some areas, like the South Bay, have seen an increase in new apartments being built despite an increase of more than 10 percent in new units over the last decade, Bizare told CNBC in June.
“In some areas, you’re seeing this sort of boom in rental supply, but it is not enough to keep up with demand,” he added.
The region’s housing crisis comes as many people are flocking to cities and suburbs to find a way to get by.
Last year, the Bay region added more than 13,000 people, up about 1 percent from 2014.
As demand for affordable housing continues to rise, the number of renters has also increased.
As of this year, San Francisco has nearly 5 million renters, up 10 percent from 2015, according Realtor.com data.
Bizarre said he has seen the rise in the number and size of units being offered in San Mateo County and in Santa Clara County.
“What we’re seeing in the next year or so is a real trend that we haven’t seen before,” he noted.
The shortage of affordable units is likely to exacerbate the shortage of rental homes, according a report released last week by the National Low Income Housing Coalition, which advocates for low-income housing.
A shortage of housing is one of the biggest barriers to moving out of poverty, according Bizart.
“A lack of housing can be the primary reason why