Silicon Valley apartment rents rose for the first time since early 2001 and it's still largely a renter's market, but perhaps not for much longer.

Novato, CA-based RealFacts recently reported Santa Clara County (which comprises the bulk of Silicon Valley) rents may have begun to chase the area's hot home price market as they rose to an average $1,285 per month from the second to third quarter this year. They still remain lower than the $1,301 monthly average a year ago.

The increase was the first time rents rose in the region since they peaked at an average, whopping $1,955 per month during the first quarter of 2001, during the dot com heyday, RealFacts reported.

Since 2001, until the third quarter this year, rents had fallen 35 percent over 14 quarters.

Revealing the market remains tilted in renters' favor, however, the occupancy rate of 94.1 percent is up from 93.3 percent a year ago, but down from 94.5 percent in the second quarter, this year.

Also, rent increases were small, an average of only $13 countywide.

Despite small rent increases, the market is on schedule to live up to last year's forecasts that Silicon Valley's long declining apartment market would begin an about face this winter.

"You might start to see 'first-month rent free' (deals) taper off in the next six months as the market improves if more jobs are created and the price of a single-family home is still up there, but I wouldn't say rents are going up," said Eric Wiegers, public affairs director, of Silicon Valley's Tri-County Apartment Association, a trade group of property owners and managers with a different database of properties.

RealFacts' numbers don't include all rental properties in Santa Clara County, only those in properties with 50 or more units, which were reported only in 10 of Santa Clara County's 16 cities.

The average rents includes all types of apartments from studios to four-bedroom units, but the bulk of the database is one-bedroom, one-bathroom units; two-bedroom, two-bathroom units and two-bedroom, one-bathroom units.

About a quarter of the RealFacts properties are newer 'Class A' and 'Class B' properties which often come with a mix of special features -- on-site facilities like fitness centers, club houses and wireless connections -- and in-room amenities, including washers and dryers and Internet hook ups.

Wiegers says the apartment association's membership is comprised largely of property owners with older, smaller properties -- fewer than 50 units per property, down to triplexes and duplexes. The association has members in Santa Clara, San Mateo and Santa Cruz counties, but Wiegers roughly estimates members in Santa Clara County account for just over half of all apartments for rent in Santa Clara County and they are not included in RealFacts measures.

Few association members have raised rents, he said.

"We still think it's a renter's market out there. You can still find low rents. You can still negotiate when it's time to renew the contract and maybe even get a drop in rent or some kind of concession," said Ryan Minniear, the association's public affairs manager.

"It's a little up-tick because we are seeing some businesses come back. Property owners are hopeful, but still kind of cautious and some small owners are still hurting," he added.

While the current creep in some rents doesn't mean a return to the stratospheric rents of 2000 and 2001, as the economy improves, renters may soon find smaller concessions and fewer amenities along with rising rents.

"As the job market goes, so goes the multifamily housing market industry. If you don't mind being somewhere for six months or longer -- if there are any concessions to be had, leases, rather than month-to-month rental contracts, are probably how you will get them now," said Wiegers.

"Compared to three and four years ago there's still a lot to choose from. They are not all two-bedroom, two-baths and they may be a little older, but they are comfortable and well-maintained," he added.

The market's slight move away from favoring renters isn't necessarily a signal to rush into the home buying market unless it's to really put down roots, experts say.

"If you can't stay put you'll have to figure in buying and selling costs, not to mention, if you are in there for less than two years, capital gains tax to pay," on profit from likely appreciation, said Robert Aldana, an Intero real estate agent who publishes the LetsTalkRealEstate.com website.

For help with the renting decision, Tri County Apartment Association offers a Renter's Education Program including the new "Renting: A User Manual," which is aimed at first-time renters in California, but packed with useful information for potential tenants anywhere.

It contains information about renter's rights and responsibilities, the rental and lease application process, move-in and move-out tips, a glossary for renters and additional referral resources for more information.

"It talks about how completing a rental application is like going on a job interview. How to dress, what information to bring to fill out an application on the spot, credit checks and references to make sure you have all the right information," said Minniear.

Published: October 27, 2004

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Broderick Perkins parlayed a career in old-school journalism into a contemporary digital news service that really hits home. The award-winning consumer journalist, originally from Wilmington, DE, is founder, publisher and executive editor of the bootstrap DeadlineNews Group, a Silicon Valley-based editorial content and consulting service specializing in residential real estate, consumer news and related editorial consulting services. The DeadlineNews Group includes the website, DeadlineNews.com, offering real estate editorial content and consulting services, and its back shop, the Deadline Newsroom, an open house on news that really hits home. Perkins obtained his formal journalism education from University of Delaware and a journalism boot camp, the Institute of Journalism Education at the University of California-Berkeley. He went on to 20 years of service as a daily newspaper journalist at the Wilmington, DE News Journal and San Jose, CA Mercury News. Perkins covered housing on the San Jose Mercury News reporting team which earned a General News Reporting Pulitzer Prize in 1989 for coverage of the Loma Prieta earthquake. He has also produced real estate, consumer and small business content for the Wall Street Journal, Los Angeles Times, RealtyTimes.com, Nolo.com, Better Homes and Gardens, the National Association of Realtors, Homestore/Move and Intuit/Quicken among more than three dozen publications. In addition to managing the DeadlineNews Group, Perkins most recently served as chief editorial consultant for Nolo's Essential Guide To Buying Your First Home, Nolo, and writes real estate television scripts for RealtyTimes.com.