Rents in Major California Cities Among the Highest in the U.S.
- Led by Silicon Valley, California was home to the four most expensive metro areas in the nation for small multifamily rentals.
- Similarly for large multifamily, San Jose, San Francisco and Los Angeles was among the five most expensive markets.
- Across the board, the nation’s most prominent finance, technology and cultural centers were also the most expensive places to live.
Big Price Tag for Small Multifamily Across California
As noted in our previous blogs, California is in the grips of a major housing crisis. Los Angeles alone has an estimated shortfall of more than half-million units to meet the affordable housing needs of its lower-income families.
In the Bay Area, the technology capital of the world, the rental affordability picture is worse. New renters pay a markup of nearly 100% in San Francisco compared to average area-wide figures.
Using the U.S. Census Bureau’s latest American Community Survey data, this deep dive highlights the simmering housing woes of California metros compared to the nation’s 50 largest rental markets. This analysis highlights the difference in rent levels between small multifamily (5-49 units) and large multifamily (50 or more units).
For small multifamily average monthly gross rents (contract rents plus utilities), California was home to the four most expensive metros in the nation.
The Bay Area took the cake. Small multifamily rents in San Jose averaged $1,967, nearly 76% higher than the national average of $1,117. San Francisco had an average small multifamily rent of $1,784.
San Diego and the nation’s second-largest metro, Los Angeles, came in third and fourth with average rent levels of $1,479 and $1,433, respectively. Additionally, Sacramento and Riverside-San Bernardino were among the 12 most expensive major urban areas in the U.S.
The above list also included the nation’s most prominent finance, technology and cultural centers: New York, Washington, D.C., Seattle, Boston and Miami.
Large Multifamily Follows a Similar Script
Metro-level data for the large multifamily told a similar story. Three of the country’s five most expensive markets for this asset class were in California.
San Jose, the epicenter of Silicon Valley, led the pack. Its average large multifamily rent of $2,146 per unit came in 35% higher than even Los Angeles, which ranked fifth on this list, and was 62% higher than the national average of $1,324.
While markets on the list for top small and large multifamily rent levels matched up pretty closely, there are a few variations. Austin’s small multifamily rents, for example, were below the national average. However, the city’s average large multifamily rents were among the top 10 highest in the country.
The data also indicated that large markets like Chicago, Dallas, Houston, Atlanta and Philadelphia were more affordable for small and large multifamily.
We’ll further explore the above trends in upcoming blogs, including a more in-depth look at housing affordability and the relationship between housing costs and household income.
For more multifamily trends and research, visit our Chatter Blog.
Note: All data is sourced from the American Community Survey (ACS), unless otherwise stated. ACS statistics are sample-based estimates of the compositional profile of the total population in the given year of data collection, and include a margin of error. Small multifamily, based on the ACS data, is defined as structures with 5 to 49 units.