Manhattan has long been the most expensive rental housing market is the U.S., but now it’s San Francisco. The average 1 bedroom apartment in downtown San Francisco is now $2,800 a month – and that’s just the average. These high rents are due to the explosive growth of dot-com jobs in San Francisco. Up until recently, most internet jobs were at the south end of the bay in Silicon Valley: Palo Alto, San Jose, Santa Clara, etc., but now, a lot of the new internet jobs are in San Francisco. The reason for this is simple. San Francisco is where well educated, 20-something, computer savvy people want to live and work, so the internet companies are moving jobs to San Francisco in order to get the people they want and need. Of course, some internet companies were always based in San Francisco, including Craigslist, Twitter, Salesforce, and Yelp; and these companies are growing too. The rental housing supply in San Francisco simply cannot keep up with all these new jobs. It’s created a seller’s market for landlords.

The high rents in San Francisco have spilled over to Berkeley. At Berkeley’s newest apartment house, Berkeley Central, 1 bedroom apartments rent for $2,500 to $3,000 a month, and 2 bedroom apartments rent for $3,000 to $6,000 a month. The owners are not having any difficulty finding tenants. On the day their rental office opened, people were waiting in line and down the sidewalk in order to turn in applications and put down deposits. Gee, when I first got into this business, I was renting 2 bedroom apartments in Berkeley for $150 a month! They were nice apartments too, but I didn’t have a free chocolate room back then.