Silicon Valley residents who've decided they can't afford to buy a home had better lock down the best deal they can get in a rental because they soon could be priced out of that market too.

Rents in the San Jose-Sunnyvale-Santa Clara metropolitan statistical area (MSA) were at an average $1,414 a month, up 9.1 percent in the second quarter this year, compared to the second quarter last year when they were only $1,296, according to Novato, CA-based RealFacts .

That's the greatest rent increase in the Novato database -- nearly 12,000 apartment complexes of 100 units or more, in a swath of 15 states concentrated to the west of the Mississippi River, but also Florida and Indiana.

The average rent is based on a mix of everything from studio apartments to three bedroom townhome rentals.

In Silicon Valley's slow but steadily improving economy, the upward pressure was strongest on two bedroom townhomes (up 12.3 percent), small junior one-bedroom apartments (up 10.7 percent), larger one-bedroom, one-bath apartments (up 9.8 percent) and two-bedroom two-bath apartments (up 9.3 percent).

Compare those increases to the median price of single-family homes -- $819,950 in June, up less than 8 percent from last year, according to Richard Calhoun, broker/owner of Creekside Realty in San Jose and publisher of the Bay Area Real Estate Market Newsletter.

Experts say higher home prices in Silicon Valley and elsewhere are forcing more and more buyers into rental homes where landlords now hold the market and are pulling back incentives as their properties fill up.

That makes long-term contracts a better deal than month-to-month or shorter term rental contracts for new renters, moving renters or contract-renewing renters.

Silicon Valley also yielded the greatest quarter-to-quarter increase in rents, which rose 4 percent since the first quarter as occupancy, at nearly 97 percent, left little room for renters to negotiate.

California regions led the way in year-over-year rent increases with the Oxnard-Thousand Oaks-Ventura MSA (up 7.3 percent), Los Angeles-Long Beach-Santa Ana MSA (up 6.8 percent -- with the database's highest average rents at $1,150) and San Francisco-Oakland-Fremont MSA (up 5.9), following Silicon Valley.

The highest occupancy rate at 97 percent was in Fresno, CA, where rents averaged only $747 a month, up only 4 percent from last year. However Fresno, with an ailing owner-occupied housing market, was the only region tracked revealing a slip in its rental occupancy rate, down from 97.6 percent a year ago.

Among the markets tracked, only Colorado Springs, CO, lost ground in year-to-year rents which fell from an average $711 during the second quarter 2005 to $708 in the second quarter this year.

None of the areas revealed occupancy rates below 90 percent as more and more would be buyers, pushed out of the owner-occupied housing market, found shelter in a rental home.

RealFacts said, compared to a year ago, twice as many MSAs yielded annual rent growth of more than 3 percent. The complete database of rentals revealed an average occupancy rate of 94.3 percent, up 2 percent for the year. Rents, throughout the database, rose an average 3.7 during the same period.

During the second quarter, MSAs joining others with previous annual occupancy increases and subsequent rent growth included Tucson, AZ; Denver-Aurora CO; Indianapolis IN; Kansas City KS-MO; and Oklahoma City, OK.

Published: July 25, 2006

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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.