Although rents are soaring and demand for rental units is growing, developers are not building many new apartments, condominiums or homes in the Bay Area, according to a new report.
The region added 6,382 housing units between April 2010 and July 2011, an increase of just 0.2 percent, newly released estimates from the U.S. Census Bureau show.
Counties that are home to such cities as Fargo, N.D., Cicero, Ind., and Rock Hill, S.C., all added more housing units than Santa Clara County, the home of Silicon Valley.
The result, analysts said, is that in San Francisco, the Peninsula and the South Bay rents are rising as new workers at social media companies like Facebook and Twitter power a second Internet boom.
“The boom in high-quality, technology-related jobs is driving higher rents in the apartment and multifamily business,” said Stephen Duffy, managing director for Moss Adams Capital, a real estate investment firm.
“These people, mostly 18 to 34 years old, prefer to rent rather than buy,” he said.
“The vacancy rate in some areas is getting close to zero,” said Paul Zeger, president and CEO of Pacific Marketing Associates, which handles housing sales for major Bay Area developers.
In most of the Bay Area’s more desirable neighborhoods, rents now average more than $3,000 a month, he said.
Still, Zeger said, “we still have a hesitancy on the part of construction lenders” to fund new apartment projects.
That hesitancy is a result of the huge oversupply of housing, mostly single-family units, that was built before the bust.
According the real estate website ForeclosureRadar.com, banks owned 10,609 foreclosed homes in the Bay Area at the end of May.
“We have huge inventories of foreclosures, which mean you can buy an existing home,” said Steve Levy, director of Center for the Continuing Study of the California Economy, a Palo Alto research firm.
But most of those foreclosed homes aren’t in San Francisco or the Peninsula. More than 5,000 are in the East Bay, while about 1,200 are in Solano County.