A Softening Bay Area Economy, but a Robust Rental Market!


The Bay Area economy is facing an uphill battle with rising interest rates, rising inflation and a soft real estate market. Most homeowners that are attempting to sell their homes are experiencing longer than usual days on the market, lowball offers and frustration on where the market is heading. It appears that more bad news may be coming as inflation may not be an easy tiger for the Federal Reserve to tame. US unemployment is near an all time low and there are reports that predict more interest rate hikes may be needed to reduce consumer spending and inflation.

As listed properties are removed from the MLS home sellers may be considering a second option: Convert the home into rental property. Authentic Property Management in Berkeley, CA gets several calls per week with questions from frustrated home sellers on how the process of the converting their home into rental property works. The conversion of the home is the easy part. Navigating local rental laws, making the home safe for renters, finding good a reliable tenant, reducing liability, managing tenants, cash flow management and repair management are the hard part. Having good, solid advice from a qualified, local, experienced property manager is the first step to success.

The good news is that the Bay Area is home to a diverse range of industries, including healthcare, technology innovations of all types, biotechnology, finance, and hospitality, which have also contributed to the region’s economic growth. The region has a highly educated and skilled workforce, which has helped to attract businesses and investment to the area. All these are contributing factors to a stable rental market. With interest rates on the rise, each uptick of mortgage rates eliminates an entire demographic of potential homeowners from entering the home buying market. Rising interest rates adds renters to the demand pool.  Additionally, the cost of homeownership in the Bay Area is high, and many people choose to rent instead of buying. This has led to a tight rental market with high demand and balanced supply.

Overall, the economy can have both positive and negative effects on the rental market in the Bay Area, and the specific impact can vary depending on various factors such as location, property type, and local economic conditions.