Updated 07/03/2026 This is updated as the economy and situations change.
CLICK FOR A FREE IMMEDIATE RENTAL ANALYSIS OF YOUR HOME
Solano County rents are on the rise again after a near 2 year sabbatical. This is mostly due to inflation. Most Bay Area cities are seeing a modest increase averaging around 5%. Places like San Francisco are going up quicker because they took a bigger hit over the past few years. Oakland and Silicon Valley are flat and maybe even declining a little. Oakland due to crime and Silicon Valley due to jobs moving to Texas.
What about tomorrow?
The Bay Area population has declined over 20,000 people a year from 2020 to 2025. This population decline is likely to continue due to seniors retiring out of state, some large employers moving out of state and a gross decline in immigration. All this while the number of homes continues to grow slightly. The housing shortage is ending quickly. Until recently, rents have been at the upper limit of their affordability. Now, rents are being influenced by how much people are willing to pay.
The local economy plays a role. With a population decline in effect, new housing construction is at a near standstill, deleting many construction jobs. In addition, numerous industries are moving from California, thus deleting the jobs they created. This makes me believe rents will not be skyrocketing any time soon.
Interest rates: Currently, monthly mortgage payments on the least expensive starter homes with little down would be around 1.3 times what rent on the same home would be. Example: what might cost $3,800 a month to buy would cost around $2900 a month to rent. When you add in the tax advantages of buying, it’s often cheaper to buy a starter home than rent one. Any time this happens, where it’s cheaper to buy versus rent, either the cost of homes needs to go up or the cost of rent needs to go down. As rents are inching up a little, likely so will home prices, especially with rates coming down a little.
Though not likely, if government intervention changes, it will grossly affect the rental market. Government rental assistance programs such as section 8 housing pay rent to landlord’s on rentals that might otherwise be vacant. This lack of vacancy keeps both rental prices and rental property values significantly higher than they otherwise would be. Thus if the section 8 program significantly grows it will drive rents up.
Government restrictions on rent increases, designed to keep rents low, often provoke landlords to raise rent as much as legally possible every chance possible, because where these government restrictions apply, a landlord can only raise rents once a year and then is limited to a small increase so if the annual opportunity to raise a rent passes, it is lost forever. Although the intentions of government intervention in the rental market is to keep rental housing affordable for all, is likely one of the larger causes of high rents.
If you’d like to receive updates via email, please join the Rental Value Trends list now and I’ll send you the next update.