By Garrick Monaghan Beyer, RCPC Board
Note: The author's opinions do not necessarily reflect those of the RCPC board.
Oakland is just beginning to undergo what might become a generational rent increase. The San Francisco Chronicle recently reported that Oakland's rents rose 3.4% in July . CoStar ,a real estate industry data provider , is forecasting over 10% year-over-year rent growth by the end of this year – more than they've tracked in 25 years.
Renters have benefited from a lot of new market-rate apartments built between 2018 and 2024, but those units have now (finally) been rented. The big apartment towers that were half-vacant during COVID-19 filled up in just the past few months, and rents are starting to rise again as demand spills over from San Francisco.
I've spoken with some neighbors recently who deny the role supply and demand play in setting rent prices. As Rockridge debates recent proposals to bring hundreds of new homes to our neighborhood, I encourage you to observe the natural experiment playing out before our very eyes. We built over 10,380 units of housing in Oakland from 2015-2025. For the first few years, demand kept pace, and rents tracked inflation. When COVID struck and demand declined, all that supply kept coming, and real rents fell for over 5 years straight.
I heard a surprising claim recently: that recent foreclosures of new construction buildings in Oakland, like The Baxter , The Logan, or Telegraph Arts, prove that market-rate buildings can't address the housing crisis. That these buildings' owners would rather keep the buildings vacant than offer more affordable rents. This claim is either a misunderstanding of economics or an intentional contortion of the facts. These buildings are struggling financially exactly because the market rents have declined – i.e., become more affordable. Using foreclosures as evidence that supply doesn't decrease rents is like claiming that vaccines cause illness—people can insist it's true all they want, but it's an anti-evidence position.
The companies that operate these buildings have been doing everything they can to attract tenants for the past five years, including leasing apartments at prices below what it costs to operate and maintain these properties. The only way to bring rents down further is to reduce the cost of building and operating apartment buildings, and unfortunately most of the community advocacy we've seen in the past 50 years in Oakland (and specifically in Rockridge) has focused on adding costs instead of removing them. As for The Baxter specifically , a recent market report by the broker Walker & Dunlop shows the building had 1 vacant unit out of 130, for 99.2% occupancy in Q2 of this year .
Remember that our market economy operates on simple logic. Things must sell for more than they cost, or they will never be sold at all. If you truly care about housing affordability , then care about reducing the cost to build it. That means reducing fees, streamlining permitting, and simplifying local requirements. That means getting out of the way of new housing as much as possible, not loading every proposal with onerous requirements.
Market-rate apartments aren't being proposed for Oakland today . Buildings are selling for $300,000 per unit, and it costs $1 million per unit to build here. But one kind of housing makes financial sense today . It can command a higher price, it has a demographically growing customer base, and Rockridge is exactly the type of neighborhood best suited to its residents. Can you guess what it is? Senior housing.