Demand has grown so strong for apartments in Sonoma County that Pine Creek Properties this year stopped putting rental ads on Craigslist.
“We are looking at being 99.9 percent full at any given time,” said Patty Goodwin, chief financial officer for the Santa Rosa property management company. “The units are renting pretty much the day we’re getting a 30-day notice” from a departing tenant.
Fueled by such demand, the county this spring recorded some of the fastest rent increases in the nation.
The average apartment rent rose to $1,521 a month in Sonoma County in the second quarter, a jump of 13.3 percent from a year earlier, according to Real Answers, a Novato-based rent research firm formerly called RealFacts.
While the dollar increases were slightly larger for rents in San Francisco and San Jose, the rate of Sonoma County’s increase was the greatest of 23 metropolitan areas in California that Real Answers studies — and higher than all the 29 other metro areas that the company reviewed around the United States.
Similarly, Dallas-based rent research firm Axiometrics reported in May that Sonoma County tied for fifth, with the Vallejo area, among U.S. communities with the fastest yearly rent increases. The only areas with faster rate increases were Odessa, Texas; Napa; and Honolulu.
When you ask why rents are rising so fast, experts repeatedly give two answers: job growth in the Bay Area and a lack of new housing in Sonoma County.
“The number one answer is the regional economy is the strongest in the nation,” said Scott Gerber, a senior vice president with Cassidy Turley in San Rafael. Gerber, who specializes in the sale of apartment complexes, said job growth in San Francisco and Silicon Valley is “creating a wave of rent pricing that is significant and pushing outward.”
As well, supply remains constrained. Few new houses and apartments have been completed in Sonoma County since the housing market began its crash nearly seven years ago.
From 2004 to 2007, the county added about 1,100 market-rate rental units, said Real Answers spokesman Nick Grotjahn. But since then, only 71 units have been built.
Two new apartment complexes are under construction in Santa Rosa and Rohnert Park, and both are slated to have their first units ready early next year. Even so, Grotjahn said, the increase is “probably not going to make a dent in the demand.”
Rents remained relatively stable in Sonoma County during the Great Recession.
But they began rising in 2011 and have soared for the last two years. Since the second quarter of 2012, the county’s average rent has jumped nearly 22 percent, according to Real Answers, which typically surveys complexes with at least 50 units.
In June, 97 percent of the county’s apartments were full. In terms of profitability, that’s actually a better occupancy rate than 100 percent, said Grotjahn. If an apartment complex over time had zero vacancies, he said, it would mean the landlord was “leaving money on table” by not raising rents even higher.
The low vacancy rate can be found in all sorts of apartment complexes around the county.
For example, the 230-unit Altamont senior complex in Rohnert Park is just as full as the rest of the 908 units that Pine Creek manages, Goodwin said.