CNN Money named Oakland in the top 10 most expensive city to live in in the US. And it’s only getting worse.
The annual Consumer Price Index (CPI) rent rate, effective July 1, 2012 through June 30, 2013, increased to 3 percent, Oakland is seeing raised rents far surpassing this years allowable rent increase.
While the annual Consumer Price Index (CPI) adjustment by the Residential Rent Adjustment Program sets the standard for rent increases every year, this year’s three percent raise, effective July 1, 2012 through June 30, 2013, is being surpassed. In fact, according to Realfacts.com, a Novato company that collects information on rents at large and managed apartment complexes, rent is up 19 percent from this same time last year.
This is due in part to the City of Oakland’s law that A landlord may increase rent at a rate higher than the allowable CPI adjustment if the increase meets acceptable justifications.
The annual CPI increase rate went from 0.7 percent in 2009 to 3.0 percent in 2012, however, and according to Realfacts.com, the average asking rent at buildings with at least 50 units in Oakland hit $1,925 (reflecting rent averaged between studios to three bedrooms) in the third fiscal quarter of 2012.
To maintain the availability of affordable rental housing, the Oakland City Council adopted the Residential Rent Adjustment Program in January 2007. This act aims to protect tenants from unjustified rent increases and protect the landlord’s right to earn a fair rate of return on their investment.
Under the Residential Rent Adjustment Program, an owner may increase a tenant’s rent only once in a 12-month period, and must give tenants notice of a rent increase. For rents being raised higher than the CPI Rent Adjustment, tenants can file a petition challenging the increase within 60 days of the notice. Petitions are presented to Hearing Officers who make a decision after reviewing information from both Landlord and Tenant. After 60 days, the tenant waives their right to petition.
Landlord resources on Oakland’s City website provide 6 justifications for a rent increase higher than the CPI allowance: banking, capital improvements, uninsured repairs, debt service costs, increased housing service costs and constitutional fair rate of return. An owner may choose the CPI increase or any combination of individual adjustments, but not both.
According to the City of Oakland, these six justifications range from saving rent increases that were not imposed in past years and imposing them in subsequent years, to allowing a bump in rent to offset increased operating expenses.
But these City-justified rent hikes are taking their toll.
According to Trevolyn Haines, a Realtor at Century 21 Showcase, “consumers looking to buy in many areas in CA today are typically going to pay less on their mortgage than what they would pay in rent on a comparable dwelling, which is a very big part of their motivation to buy right now.”
As rent continues to increase in Oakland, residents are looking more towards a long-term investment of purchasing a house instead of continuing to pay expensive rent towards some one else’s home, ZipRealty.com.
Oakland rents continue to surge in 2013, with no sign of a decline in sight.