SAN JOSE, Calif. (KRON) — In Silicon Valley, rental rates for multifamily homes have increased over the 2020 dip as a large share of renters say 30% of their income is set aside for housing, a recent analysis reveals.
According to a new analysis from Joint Venture Silicon Valley’s Institute for Regional Studies, multifamily unit rental rates rose steadily for several years prior to the pandemic, reaching more than $3,300 a month in San Mateo County and $2,900 a month in Santa Clara County.
Rental rates sharply fell between March 2020 and the first quarter of 2021, followed by a slight increase over the last several months.
Depending on building age and class — rental rates vary significantly, with the highest rates among newer developments, also known as “Class A” property.
Across all sizes from studio to three-bedroom units, Class A rental rates are between $420 and $680 more per month than older “Class C” properties.
Silicon Valley continues to suffer from severe housing shortages and rising prices due to elevated demand.
According to the analysis, the number of Silicon Valley multi-family residential units completed in the first half of 2021 represents a significant drop from previous years — 726 units, compared to a 2013-2020 average of more than 7,400 annually.
Currently, there are 15 notable large multifamily residential developments under construction throughout Silicon Valley with a total of 5,932 units — the largest number of units in San Jose (1,101 units), Sunnyvale (1,101 units), Mountain View (1,079 units), and Santa Clara (953 units).
Across seven of the 15 developments, the average starting price is $2,600 for a studio or one-bedroom apartment and of the nearly 6,000 units under construction an only 373 are set aside for low-income households.
But there is some good news — the estimated number of residential units in building permits issued this calendar year will be more than double that of 2020, with 65% in multi-family.
The majority of multi-family residential developments are located in Santa Clara and San Mateo Counties.
Note: The data in the analysis identifies Silicon Valley encompassing San Mateo and Santa Clara Counties, the cities of Fremont, Newark, and Union City.