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When Chuck Post became a leasing agent out here in the Bay Area back in 2009, the post-financial-crisis rental market was so bad that he often resorted to "discounts," inducements like free parking, and even the first month free – just to get prospective tenants to sign on the dotted line.
That was then.
And this is now.
Thanks to a booming economic recovery, a record-breaking rebound in stocks, and the emergence of entirely new sectors in tech, Bay Area landlords are now calling the shots. Prospective tenants are lining up when a new listing appears, apartments get snapped up in a week or less, and rents are skyrocketing, Jed Kolko, chief economist for housing-services player Trulia, told The San Francisco Chronicle.
"Rents are rising faster in San Francisco than almost anywhere else in the country," Kolko said. "Rising rents are a bigger challenge than rising home prices, especially in a place like San Francisco where buying is out of reach for many middle-class and lower-middle-class people."
This isn't just a lot of jawboning.
In San Francisco in the third quarter, the average monthly asking rent in the bigger complexes punched up through the $3,000 barrier for the first time ever – hitting a record $3,096, says researcher RealFacts.com. That represents a year-over-year bump of 11.9%. And median asking rents for San Francisco rentals listed by apartment leasing service Lovely rocketed a massive 21% to hit a record $3,398 for that same time period, The Chronicle says.
And don't expect a reprieve: San Francisco experienced the single-biggest rent increase in America in January, a 12.3% surge that jumped the monthly rent of a two-bedroom flat to $3,350 a month. Nationwide, rents increased an average of 3% – an increase that was nearly double the U.S. inflation rate of 1.7%.
Though analysts I speak with tell me that Silicon Valley rents won't keep zooming at the current pace, the ongoing tech boom that I am forecasting essentially ensures that the rental-housing boom will continue until the decade's end.
In short, this "rent inflation" is a very big deal.
In the Bay Area, soaring rents are creating what one official referred to as a "crisis of affordability" that could short-circuit the tech boom.
And in the broader U.S. economy, zooming rent costs have joined with skyrocketing food prices (which we told you about last week) as the inflationary catalysts that are right now putting a big bite on household budgets.
As you and I both know, whenever a problem like this arises, the most ambitious and innovative companies will seek to solve it – while making a hefty profit in the process.
By finding those companies, you get de facto "protection" from the problem itself, because you're profiting from the solution.
We've uncovered one of the real winners – a Big Data firm that has a stranglehold on the U.S. rental market.
Here's why we believe the company's stock can double over the next three years…
About the Author
Michael A. Robinson is one of the top financial analysts working today. His book "Overdrawn: The Bailout of American Savings" was a prescient look at the anatomy of the nation's S&L crisis, long before the word "bailout" became part of our daily lexicon. He's a Pulitzer Prize-nominated writer and reporter, lauded by the Columbia Journalism Review for his aggressive style. His 30-year track record as a leading tech analyst has garnered him rave reviews, too. Today he is the editor of the monthly tech investing newsletter Nova-X Report as well as Radical Technology Profits, where he covers truly radical technologies – ones that have the power to sweep across the globe and change the very fabric of our lives – and profit opportunities they give rise to. He also explores "what's next" in the tech investing world at Strategic Tech Investor.