Not ‘California Dreaming’ When it Comes to Apartment Rents

Updated July 2026

Apartment rent increases in 2013 weren’t just a California phenomenon. They were a nationwide trend, led by cities with booming economies. San Francisco’s average rent hit $2,498, a 7.8% jump from the previous year, making it the top metropolitan area for rent growth among the nation’s top 50, according to MPF Research.

Oakland came in second with a 6.9% rise. San Jose, despite being a tech hub, lagged at 5%. These numbers reflect more than just local demand. They signal a shift in how housing markets respond to economic cycles, employment growth, and supply constraints.

Even outside California, cities like Denver, Seattle, Portland, Houston, Austin, West Palm Beach, and Fort Worth saw significant rent gains. Fort Worth, Texas, recorded a 3.6% increase in the second quarter of 2013, evidence that rising rents were not confined to coastal tech centers.

What’s Driving the Surge in Rent Growth?

Two industries are fueling the spike: technology and energy. In San Francisco and surrounding areas, companies like Salesforce, Google, and Apple were expanding their Bay Area footprints. That meant more high-income workers moving in, and more demand for housing.

Meanwhile, energy firms in Houston and Dallas were seeing renewed investment. The U.S. Securities and Exchange Commission reported a surge in energy-sector filings in 2013, indicating growth. That translated into jobs, relocation, and higher housing demand.

But the story isn’t just about tech and energy. The broader economy was improving, too. The Federal Reserve’s G17 report noted that employment growth had stabilized, and consumer confidence was rising. More people were starting households, especially young adults aged 25 to 34.

According to the U.S. Census Bureau, household formation rose by 1.4% in 2013, up from 0.8% the year before. That means more people were moving out of parental homes and seeking their own apartments. The 2013 American Community Survey confirms that young adults were increasingly choosing independence over living with parents.

For example, a two-bedroom apartment in San Francisco that cost $2,320 in 2012 rose to $2,498 in 2013, a $178 increase. Over the course of a year, that’s an extra $2,136 in rent. That’s more than the annual cost of a mid-tier car insurance policy for many drivers.

Why Are Rents Rising in So Many Cities?

Supply isn’t keeping up with demand. In high-cost areas like San Francisco and Seattle, zoning laws, lengthy permitting processes, and environmental reviews slow down new construction. The U.S. Department of Housing and Urban Development (HUD) published rent limits for 2013 that reflect just how expensive housing has become in California’s metro areas.

For example, in San Francisco, the HUD-defined “high HOME rent limit” was set at $2,380 per month for a two-bedroom unit. That’s below the actual average rent, meaning many renters were paying above the affordable housing threshold. In Oakland, the limit was $1,840. The gap between official limits and market prices highlights a growing affordability crisis.

Even in less expensive markets, new construction is lagging. MPF Research reported that nearly 15,000 new apartment units were approved for construction in California over the next 18 months. But that still doesn’t close the gap. In some ZIP codes in San Francisco, apartments were being leased before physical tours even took place.

One limitation: this trend favors renters with stable, high-income jobs. Those earning below the median wage, particularly in cities like Oakland, may struggle to afford even modest increases. A worker earning $45,000 annually spending 30% on rent would face a monthly cap of $1,125. In Oakland, average rents were already $2,040. That’s a gap of $915, more than half their rent budget.

Landlords Are Winning, But at What Cost?

Landlords in high-demand cities are reaping the rewards. The Wall Street Journal noted that while San Francisco was “among the worst cities in America for renters,” it was “among the best to be a landlord.” That’s not just anecdotal. In 2013, the average rent in San Francisco was $2,498, up from $2,320 in 2012.

Some owners are flipping single-family homes into multiple units. In Oakland, a 2013 report by the California Department of Housing and Community Development found that over 7,000 homes were converted into multi-unit rentals, often with subletting or shared occupancy. That shift raises concerns about tenant protections and long-term housing stability.

Meanwhile, investor demand is soaring. Firms like Brookfield Asset Management and Blackstone Group were buying up rental properties in cities like Austin and Denver. According to the U.S. Census Bureau’s American Housing Survey, investor-owned rental units rose by 3.2% nationally in 2013, up from 2.8% the prior year.

How Do Rent Increases Affect Renters and Investors?

For renters, the outlook is tough. In high-cost cities, rent burden, defined as spending more than 30% of income on housing, is rising. In San Francisco, nearly 60% of renters spent more than 30% of their income on rent, according to HUD’s 2013 data.

For investors, the market is ripe. Real estate investment trusts (REITs) like Prologis and Equity Residential were expanding their portfolios. The SEC filings show that REITs increased their property acquisitions by 12% in 2013 compared to 2012.

But there’s a growing concern: rent control. Cities like San Francisco and Los Angeles have long had rent stabilization laws. The HUD manual on budgeted rent increases outlines procedures for rent adjustments in federally assisted housing, capping annual increases at 3.5% for certain projects.

Still, in non-regulated markets, landlords can raise rents freely. In Seattle, for example, the average rent rose by 6.1% in Q2 2013, well above inflation. That’s a challenge for renters with fixed incomes, like retirees or disabled individuals.

Frequently Asked Questions

Is San Francisco really the most expensive city for rent?

Yes. In 2013, San Francisco had the highest average rent in the top 50 U.S. metro areas, $2,498 per month, with a 7.8% year-over-year increase.

Why are rents rising in cities like Denver and Austin if they’re not in California?

Strong job growth in tech and energy sectors, rising household formation, and limited new construction are driving demand. Denver and Austin both saw rent increases above 6% in Q2 2013.

How does household formation affect rent prices?

More people forming households means more demand for housing. The U.S. Census Bureau reported a 1.4% rise in household formation in 2013, up from 0.8% in 2012.

Are there any laws limiting rent increases in California?

Yes. In cities like San Francisco, rent control laws cap annual increases. The HUD manual on budgeted rent increases limits increases to 3.5% in federally assisted housing.

How many new apartment units were approved in California in 2013?

MPF Research reported nearly 15,000 units were approved for construction over the next 18 months, though that still doesn’t meet demand in high-cost areas.

What’s the difference between rent control and rent stabilization?

Rent control limits how much landlords can raise rent each year. Rent stabilization allows moderate increases, often tied to inflation or cost-of-living adjustments. The California Department of Housing and Community Development oversees both.

Are REITs investing more in rental properties in 2013?

Yes. The SEC reported a 12% increase in REIT property acquisitions in 2013 compared to 2012.

What’s the impact of investor-owned rental units on rent affordability?

More investor-owned units can reduce supply for first-time homebuyers and increase competition. The American Housing Survey found that investor-owned rentals rose by 3.2% nationally in 2013.

Why do some apartments rent before being toured?

High demand in cities like San Francisco and Seattle has led to bidding wars. Some landlords sign leases based on credit scores, employment history, and Experian-based credit checks, even without physical tours.

How can renters protect themselves from rising rents?

Check local rent control laws. Use tools like the Annual Credit Report to monitor credit scores. Consider renter’s insurance through providers like AAA or Geico.