California's Silicon Valley Wins Again: "2014 Highest Rent Increase"

[Bogdan Cirlig]

For San Francisco Bay Area, the heart of booming high tech industry, it seems that the sky has (again) no limit. The huge influx of venture capital has started a trend where for the past 3 years young professionals are flocking to get a coveted Software Engineer job with a promising and well funded startup.

That is great news except for the housing market.

Bay Area rents have seen a whooping 25-30% increase in December 2014 vs same month of previous year. That adds to an overall upwards market sentiment that pushed rents higher each month over the previous one for whole 2014.

Surprisingly, or not due to rent control, the city of San Francisco where most of the high tech boom seems to cluster, the rent increases appear to be somewhat flat, with increases in the mid single digits.

That can tell one thing, that a lot of people working in the city, actually commute in and rent in the surrounding areas. This can be noticed by the fact the highest rent surges are in nearby cities such as Oakland, Concord and San Mateo, where the 2 and 3 bedrooms have hiked by 30-40% in 1 year.

The trend might be explained by the fact that having roommates is a very popular option in the tech crowded job marketplace, which pushes the 3,4 and 5 bedroom rents sky high. In the end, each roommate ends up paying a smaller rent than securing their own 1 bedroom.

Everybody screams "tech bubble" What's your take on it?