Rent prices have spiked in Sonoma and Napa counties since 2021. Here’s what experts are saying

Renters in Sonoma and Napa counties have seen soaring rental prices over the past few years with little relief predicted anytime soon.

It’s meant dramatic personal choices for many renters: Do they take on a roommate? Move back in with parents? Perhaps pick up a second job? Or, look outside the two counties and commute a greater distance?

Following the ending of renter protections in 2022 for some California counties, experts noticed rent prices immediately started to jump.

Shelly Massey, 57, was born and raised in Petaluma and moved into her Rohnert Park apartment in 1988. Her rent was $570 a month — including gas, electricity, cable, water and trash — for a two-bedroom, two-bathroom apartment with access to a pool and two parking spots.

Massey’s rent increased in small increments, but she has watched her rent spike within the past eight years.

Between 2003 and 2014, Massey’s rent increases were minimal and no higher than $40 every few years. But it was 2015, when she was paying $1,200 a month, when she started seeing larger hikes, with the biggest spike in 2017 when her rent was raised twice in one year.

She now pays $1,980 for the same apartment she’s lived in since 1988.

Massey was able to work from home over the past year but recently got a new full-time job in Novato so she could afford her rent.

She worries she’ll have to get a second part-time job to afford her apartment.

“It feels discriminatory because as we get older, our income becomes even more limited,” she said. “I also know so many people where their kids can’t move on with their lives and live at home because they can’t afford the rents.”

The Zillow Observed Rent Index measures changes in rents over time in a given region. Index prices represent what renters should expect to pay in that area and reflect seasonal adjustments.

Rent prices have skyrocketed in Sonoma County since 2021 with the highest recorded average asking price sitting at $2,714.21 in June of this year, according to the index.

Average rent prices in Napa have started to level off to $3,227.93 in June following an abrupt spike that lasted between February and April. Napa County saw a similar peak in rent prices last August.

Why are rents so high?

Part of the reason for recent increases in rent prices is due to the expiration in 2022 of a cap on increases in rent for fire-ravaged counties in California, including Sonoma and Napa.

There is a state law enacted in 2020 that caps rent increases for many rentals at 5% a year plus the local rate of inflation, or 10%, whichever is lower. That is set to expire in 2030.

Single-family homes and buildings under 15 years old are exempt.

Because of the expiration in 2022, housing experts said landlords who were exempt raised rents to meet what would now be considered market-rate value.

Fair Housing Napa Valley executive director Pablo Zatarain said in Napa County, they started to see rent increases as high as $600 emerge.

“That’s what’s gotten us to this point and now these rents have caught up to what ‘market-rate’ is,” he said.

Reporting from The Associated Press found that demand for apartments skyrocketed during the pandemic as people sought to relocate due to jobs going remote. Across the country, developers of rental projects rushed to meet this demand.

Commercial real estate tracker CoStar found there are nearly 1.1 million apartments currently under construction nationwide, a pace The Associated Press said has not been seen since the 1970s.

Sonoma State University economics professor Rob Eyler said rent prices also tend to follow the housing market, with people typically renting in locations where they hope to buy a home.

High home prices and interest rates along with low inventory have forced buyers to linger in the rental market.

This creates an increase in demand for rentals, causing prices to creep up.

“It basically boils down to supply and demand,” Eyler said. “If the supply of rentals is not keeping pace with demand, you’re going to see more pressure on rentals as well.”

Priced out of Sonoma County

California’s population is declining, leading some to think that prices would drop, especially rents.

However, Generation Housing director of special initiatives Josh Shipper said construction on housing has continued to be outpaced by population.

So, even as people have moved out of Sonoma County, it’s not enough to offset demand.

This has also priced middle-income earners out of the ownership market and forced them to linger in the rental market.

“Many affordable units are not available to them … and many of the market rate units are not available to them,” Shipper said. “There’s just more people looking for that middle rental option.”

Massey has opted to rent all of these decades because she isn’t usually home due to her work schedule and social life. She said renting doesn’t burden her with issues related to homeownership.

Most of Massey’s rent increases happened on an annual basis until a few years ago when everyone in her apartment complex was transitioned to month-to-month leases.

Her complex was sold a few months ago to a different apartment management company with plans to raise rent 10%.

”You used to be able to move north to get less rent, but that’s not even possible anymore,“ Massey said. ”Now you have to think about leaving the state all together because there’s no affordable living here.”

The latest State of Housing report from Generation Housing found that the majority of permitting in Sonoma County has continued to be for single-family homes since at least the 1980s.

Census data showed that between 2010 and 2020, the county population grew 1% whereas housing units only grew about one-tenth of 1% in the same period.

RentCafe analysis from Yardi Matrix data determined there were 839 apartment units completed between 2020 and 2022 in the Santa Rosa-Petaluma metropolitan area. A study from the research firm and apartment listing website estimates that 798 units will be completed in 2023.

Shipper added that there’s also a delay in what they call “household formation,” when people, typically between the ages of 25 and 45 begin to settle down and start to think about having a family.

But due to the increase in rent and prices overall, that’s being delayed an estimated five years.

Rent in Napa at an all-time high

In Napa, there has been a sharp increase in rent each year for the past few years, with June marking the highest rental price at $3,227.93.

Napa is fairly isolated, geographically. Because of this, renters are forced to find rental options exclusively in Napa County or take on a long, heavily trafficked commute to and from their workplace.

Fair Housing Napa Valley is a nonprofit agency that offers counseling to both tenants and landlords regarding their rights and responsibilities.

Zatarain said the inventory of rental housing has been especially low in Napa County following the pandemic, fires and other factors similar to what’s been experienced in Sonoma County.

Caritas Corp. is a California-based nonprofit that recently opened its first Napa affordable housing development earlier this summer. CEO Randy Redwitz said Napa’s popularity with the wine industry has led to the recent build of luxury hotels, resulting in an increase in service industry jobs.

But, he said many of the employees at these hotels and tourist lodgings have been priced out of living nearby and are instead commuting to work nearly an hour-and-a-half one way.

“It’s an interesting dynamic of expansion and employment but no housing for the employees,” Redwitz said.

“Our project means at least 20 families can work and live in proximity to where they’re working as opposed to commuting between an hour or even two hours from the outside area.”

There are multiple affordable housing projects that are either under construction, in the planning phase or recently completed, such as the Caritas Village that opened in early July.

The affordable housing development, located on Old Sonoma Road in Napa, selected tenants through a lottery and have steadily been moving in since the opening.

Zatarain said the impact these new developments on their own will have on the affordable housing inventory will be minimal and that Napa is experiencing a “catch-up” to find solutions.

“Napa is very conscious, perhaps protective, you might say of impact preserve agricultural land and so the capacity to build is limited by that,” he said.

“So really, what you’re looking at is more high-density building which promotes smart growth.”

You can reach Staff Writer Sara Edwards at 707-521-5487 or sara.edwards@pressdemocrat. com. On Twitter @sedwards380.