As we highlighted last month:

Having already started to slip earlier this year, prior to the COVID-19 hit, the weighted average asking rent for an apartment in San Francisco has dropped around 4 percent since the end of February to $3,950 a month, which is down over 7 percent on a year-over-year basis and 11 percent below a 2015-era peak of around $4,450 per month, with the average asking rent for a one-bedroom in the city now down to around $3,300 per month (which certainly isn’t cheap but is 8 percent cheaper than at the same time last year and 11 percent below peak).

As we also noted at the time, listing activity for apartments in San Francisco and Oakland was up nearly 25 percent on a year-over-year basis.

And while a number of larger developments in San Francisco were already offering 4 weeks of “complimentary” rent for new lease holders, said offers have now been increased to 6 weeks for an effective discount of 11.5 percent over the course of a year.

Comments from Plugged-In Readers

  1. Posted by too damn high

    So, the average rent is down to ⅓ of a stimulus check?

    I guess those who suffered the most during the (round 1) shutdown moved out of the city long ago. But companies like Twitter now offering 100% telework the incentive to live in Sacramento, Tahoe, San Diego, Reno, etc. instead of paying $4,000 / month to live close to the office will have some ramification on rents.

    It just doesn’t look like it’s really hit that hard. Will it ever?

    • Posted by thisishowicomment

      You would still have to live in Sac or Reno, which is worth thousands to avoid.

      • Posted by too damn high

        Living among the developed world’s worst homeless problem and public defalcation is not worth $4,000.

        Good sushi in SF though.

      • Posted by Dave

        No. There is Tahoe, there is Napa and Sonoma Counties, there is Eugene, there is Grants Pass. To name a few. Sacramento was a drastic option for some who actually commuted into the Bay from there. Now, with no commute, one can skip Sacramento and go to Auburn or Placerville or Lake Tahoe.

        • Posted by Tony Timpa

          You know what they say: There’s no better way to accelerate your career than to move to Placerville and expect your tech boss to pay attention to you over Zoom.

        • Posted by Dixon Hill

          Internet service in Truckee is provided by SuddenLink. Can be out for days at a time in winter. I’ve looked into it. That’s a hard no for me.

        • Posted by Brahma (incensed renter)

          Tony Timpa you are in denial. From New numbers show more San Franciscans are leaving the city as a renter’s market emerges:

          Some tech companies, including Yelp, Stitch Fix and Lyft, have all had lay-offs in the city over the last few months as others make plans to let employees work from home, permanently. Recent signals from tech giants that the future of work may be remote has also led to many San Francisco residents and tech employees seeing an opportunity to move from the city. A recent poll showed that two out of three tech workers would consider leaving if they were able to work from home.

          If you follow the hyperlink you can read more about the poll. Your boss is going to have to pay attention to you over Zoom, because that is the only way she will continue being a manager, because almost everyone on her team will be connecting with her via Zoom.

          • Posted by Ohlone Californio

            Your bolded poll synopsis there differs from any other time in history in what way? “Would consider leaving” ? if able to work from home? What renter wouldn’t have said they’d “consider” such a thing at any time, ever?

            Then you go to the hyperlink of the words “would consider” and it’s even more nuanced.

            Then you go to the other piece that’s linked to, the synopsis of the Bloomberg article, and read the Bloomberg article, also more nuanced.

            These stories are stacking editorial synopsis on top of editorial synopsis and writing narratives.

            Asking rents have gone down. Some people are leaving and for obvious reasons. But I’d be hesitant in talking about “when things never go back to normal, and when the city never is interesting again” and riffing off that, while pointing to editorials using editorialized and truncated versions of other publications.

          • Posted by barney

            “Your bolded poll synopsis there differs from any other time in history in what way?”

            Because we are in the midst of a global pandemic where people have been required to work from home for months now.

            Where many tech employers are allowing/requiring continued WFH policies. Where the tools Zoom/Slack/Git/Dropbox have matured to the point where WFH is easy and effective. Where most of the amenities related to being in a city have been shutdown. Where public transit and close human contact is risky.

            Other than all that, I guess nothing is really different from any other time in history…

          • Posted by Ohlone Californio

            But you reinforce my point. Of course we’re in the midst of a global pandemic in which society itself starkly differs. Yet, people saying they’d “would consider leaving” remains constant. “Would consider leaving” if able to work from home. Renters have always said that and always will. Here’s the same story from October 2019, minus covid-19. People on here said the same things and drew the same conclusions from the same sort of polls then.

          • Posted by SocketSite

            Here’s a better baseline and historic data for the trend(s) at hand: 35 Percent of San Francisco Residents Now Say They’re Likely to Leave

          • Posted by Tony Timpa

            King of incense and blown smoke. Yahoo had WFH for a while and Marissa Mayer called everyone back in because people weren’t collaborating or getting much done. Yahoo is a poster child for mistakes followed by too little change too late.

            SF might lose some twenty-somethings for the next 12-36 months. I grant you that. But if you have ever worked with a remote team or been pitched a product via a ‘web conference’ you will find that they are pale substitutes for being in “the room where it happens” (shouts out to Lin Manuel and Johnny Bolton). I say again, if you want to torpedo your career, go move to Placerville and buy a fixer and expect to continue ascending in Silicon Valley/San Francisco.

          • Posted by purple wurple

            Nothing got done at Yahoo… because it was late stage Yahoo. They could have required that everyone live on site and the result would have been the same. And what happened after Marissa called everyone back? Did Yahoo reverse its decline and become a tech titan? Nope, continued slide into irrelevance. If you want to torpedo your career, go to a has been tech company and pin your hopes on some string of management fads reversing the decline. You can’t compare desperate companies that tried WFH as a hail mary play vs the current situation.

            Pretend you are the CEO of Uber, losing billions per quarter pre-COVID and now ridership plummeting. You really think that the answer to your business problems are to make everyone schlepp into an office in downtown SF?

            Companies that had their ‘S—‘ together, will still have it together with WFH. Companies that didn’t will move to slash costs to buy more time to get it together

          • Posted by Brahma (incensed renter)

            Tony, sounds to me like you haven’t worked for a tech firm since the pandemic hit. I say again: any and every manager worth his or her salary can and is managing their employees remotely, because that’s the only way it is being done. No one has the option of being in the office, so it doesn’t matter if you’re in S.F., Mountain View or Placerville. I realize that you’re wishing everything will go back to normal, but the toothpaste is out of the tube and there’s no putting it back now.

            I had friends and acquaintances who worked at Yahoo just prior to Marissa Mayer’s edict. That was — barney’s correct here — before the widespread availability and adoption of Zoom, GitHub and Box.com not to mention MS Teams, Google Hangouts, and the list goes on and on and it’s weird you don’t want to acknowledge this. Let me ask you: are you still using WebEx?

            Things are different now, and the lesson to be drawn from Yahoo’s former CEO is that Yahoo’s problems couldn’t be fixed by having everyone in the office (in case it isn’t obvious by now).

            This isn’t 2013. Twitter letting everyone WFH is the tip of the iceberg. By the time a new coronavirus vaccine appears everyone will have made the adjustment and folks who think that “being in ‘the room where it happens’ ” in person is a requirement will be out of the industry. Hope those folks are making catch-up contributions to their 401k right now.

          • Posted by two beers

            The fervor with which some people deny that the technology can do what it was originally sold as being able to do is clarifying.

            “We have this new technology that will disrupt the way people work.”
            “Wow, look at the local real estate boom due to this new technology.”
            “This technology is destroying the foundation of the real estate boom.”
            “Er, the technology doesn’t actually disrupt the way people work.”

            It’s perfectly acceptable to use tech to disrupt the jobs of working class people into oblivion, but it’s unthinkable when tech then disrupts the flow of wealth into the high-value asset-owning class.

          • Posted by Tony Timpa

            I think we have a lot of data about the way successful tech companies are responding to the Shelter-In-Place guidance. I don’t think we have very much data about how effective those companies are at their central tasks of innovating with their employees spread out and working from home. Are they actually getting anything done?

            We don’t know if WFH is a permanent change, or if it is a permanent change for a subset of people, how the careers of those remote workers will be affected (which is my point). If you’re a special fantastic engineer, you can already work from home and have people beat a path to your door. Most people aren’t special.

            If Zoom and GitHub etc. (I started using GitHub in like 2008, so you probably know a lot more about it than I do) and the combination of sitting in front of screens is as effective for human success as you claim, we should also start wondering about what to do with all the college campuses and the kindergarten classrooms we won’t need anymore.

            Most of the people involved with those activities are pretty sure there is a step down in achievement in, say, trying to teach math to second graders with zoom vs. actual physical presence. Work and school are really not so different at the end of the day.

            Good luck to you!

      • Posted by Freeloader

        I go to Sacramento several times a year. Have you been recently? It’s very pleasant, with good food, bars, etc. Yes, a bit sleepy but small and flat enough to be very bikeable even in the warm summer evenings.

        Still haven’t found a croissant or kouign-amann there that compares to Arsicault, B, or Tartine.

  2. Posted by tipster

    “Complimentary rent” deals are an attempt to keep the current tenants from believing that rents have fallen, while building in an automatic rent increase for you the following year.

    Those landlords who engage in such shenanigans are signalling that, next year, you too will be paying above market, like they are hoping all of the rest of their current tenants will, and should be avoided. You’re signing up with someone who is admitting to trying to screw their existing tenants, and that never ends well for you. There are plenty of landlords who don’t pull such stunts, and you’ll have a better experience with them. “Complimentary rent” landlords give you a list of landlords to avoid even talking to.

    As for not hitting that hard, when the unemployment bonus and PPP money runs out next month, I expect it will leave a mark.

    • Posted by observant neighbor

      Has the Rent Board issued any guidance or decisions about what counts as a tenant’s “base rent” if the lease includes a first-month-free provision? If the base rent is the stated monthly rent rather than average monthly rent, I would expect “complementary rent” to become a universal practice for buildings subject to rent control.

      • Posted by tipster

        Yes, the rent board divides the rent you paid in the first year by 12. Anything above that is an increase and has to stay within the rent ordinance.

        It is a simple administrative matter to get your rent rolled back if the landlord tries for an illegal increase. You show up for a hearing, show your checks paid and your bank statements showing that there was no rent paid during the free period (and I would bring the ad describing free rent — save that), and if the landlord can’t produce evidence of any other payments, the rent board orders the landlord to refund any increase, which you do have to pay until the rent board decides, which will usually take about a month. Usually in those situations, the landlord won’t even show up as they know full well they are just wasting their time.

        If the landlord doesn’t refund it, you are allowed to deduct it entirely from your next rent payment or payments if it’s more than one, which will be stated in the order from the rent board. The annual percentage increase allowed is posted on the rent board web site.

        • Posted by Neighborhood Activist

          So are you saying that anyone getting “free rent” in a rent-controlled building would actually be entitled to a rent REDUCTION after the first year, because continuing at the stated rent would be an effective increase (exceeding that permitted) over the average rent during the first year?

          That’s more than a bit cray cray, but it sounds like it might be right. In that case, “free rent” is only an option for new buildings not subject (yet) to rent control. For any rent-controlled building it would be a really bad idea.

          • Posted by Freeloader

            That’s correct. I know someone who did this circa 2002.

        • Posted by Alai

          So you’re saying the thirteenth month should be free.

  3. Posted by needaslightmiracleoverhere

    Trying to rent when you are on temporary layoff / collecting unemployment & have a guarantor, yet are not a student has proven to be fruitless for the past month for myself. Not really sure why some of these landlords aren’t interested in getting paid at the beginning of the month, etc.

    • Posted by Tony Timpa

      It’s almost as if rules that give tenants a panoply of rights, and make it almost impossible to move you out if you stop paying rent make landlords unwilling to take a risk on someone who wants to work hard but can’t demonstrate actual income.

    • Posted by Brahma (incensed renter)

      Unemployment insurance payments are actual income, and unlike “gig work” jobs like driving for Uber or Lyft which deliver spotty, uneven payments, my understanding is that UI pays out on a regular basis. Don’t know why small-time penny ante landlords would prefer the latter over the former. Maybe they think people with precarious jobs are easier to take advantage of.

      • Posted by Notcom

        It pays ’til it stops. (Which admittedly is true of any income stream, but UI has a fixed timeline). I believe the OP qualified this w/ “temporary layoff”, but perhaps many landlords are nervous about that distinction becoming undone. Should it reach a point that landlords are fighting over/choosing b/w people w/ UI “income” and Uber drivers, might we take it as a sign that the market is softening ??

  4. Posted by Dave

    Clicked on the link for Fifteen Fifty Mission two weeks ago. The deal was 4 weeks free rent if you signed a lease. Checked it out today and it is 6 weeks free rent. Apparently they are having trouble luring in tenants. Prior to Covid and Twitter’s allowing permanent telework this new apartment tower would probably have appealed to Twitter workers. Today not so much.

    I know of one Twitter worker who has opted for telework and is vacating her Mission St. apartment. About $3100/month in an older building. This person is moving to the St. Helena area and has found an apartment for $2350/month. Larger with a private sunning deck and private yard. By contrast studios at Fifteen Fifty are going for $3700 – $3900. It’s gonna be tough for these larger SF developments.

    The WSJ just ran a story on San Francisco potentially losing it position as a tech hub as small start-ups leave and younger workers become less interested in living in SF.

  5. Posted by Kyle S.

    They’re having trouble renting 1550 because their asking rents are insane.

    I think I would be in favor of a state law that required all rents to be advertised with any concessions amortized across the lease term. This would help combat the natural stickiness of prices, making the rental market function more like an actual market.

  6. Posted by Themiddlepath

    Regarding people leaving the City to telecommute at cheaper rents, do unmarried 25, 30 or 35 year olds really want to move to the suburbs? Don’t they want the entertainment the City has to offer? One winter shoveling in Tahoe and those pretenders will be out of there! This seems like a short-term issue that can be taken advantage of by people who can see a year out, and good for them. Or maybe other communities will build elsewhere, that takes time. I really don’t know the answer to this.

    • Posted by Dave

      Some people like the snow! Some don’t of course. Eugene would be a great option for them or San Diego. The point is one can customize their abode. As to entertainment, some places like Boise have great music and social scenes if that is what one wants.

      Talking about taking a year out, I was surprised to learn that the city of SF will allow a large segment of its office workforce to telecommute until June of 2021. Sweet. Some city employees are going “home” for the year. I know several such. I expect a number of them will choose not to return to their City job next year. A win, win as SF may need to reduce force due to budget shortfalls resulting from the pandemic and having employees voluntarily quit rather than having to fire them is a lot less messy.

    • Posted by jimbo

      they will refer to the Tinder Index. if the Tinder Index is high in a suburb, its a go. if not, then no

    • Posted by Brahma (incensed renter)

      Sure, many unmarried 25, 30 or 35 year olds really want do want the entertainment The City has to offer, but much of that entertainment has been severely curtailed or disappeared since the first Stay-at-Home Order was issued. Now, post new coronavirus, going out to a crowded bar for drinks, dancing at a crowded nightclub, going to a packed theater to see a movie or play, or going to a restaurant all fall into the category of “unnecessary and unsafe” behaviors. Being entertained is not a good motivation for you to risk having to be hooked up to a ventilator for two weeks while you run up a very expensive hospital bill.

      Those entertainment options have not been replaced by alternatives, it will just be a long time before they become viable again unless the all-singing, all dancing, perfectly efficient capitalist marketplace does what we are told (mostly by capitalists) it does best and direct capital towards the research and development of a Covid-19 therapy or an inexpensive vaccine and that effort produces near-term effective results.

      Once the ball really starts rolling and people start moving out to the suburbs or other cities outside of the Bay Area en masse then it won’t be “a short-term issue” because employers will follow by closing down S.F. offices and opening more satellite offices in smaller communities if they aren’t allowing all white-collar employees to work from home. At that point it won’t matter if a therapy or vaccine becomes available because the damage will be permanent. The bars, nightclubs, theaters and many restaurants will have shut down for good, and there will be precious little difference between The City’s amenities and more remote town’s amenities unless you call much higher living costs an “amenity”.

  7. Posted by wilson

    Many anecdotes and whats app threads about people leaving the city, but people were asking about hard data. WSJ has an article that uses cell phone location data quantify that. SF has the biggest out-migration of any city they profiled. Most SF leavers look like they are staying in-state. Looks like they just count people who left to another urban center and stayed at least 3 weeks, so this likely over-counts people who are gone for good. Still, this backs up all the anecdotal data we are seeing.

    • Posted by SocketSite

      Speaking of key trends, hard data and out migration. Of course, that was prior to the COVID-19 hit and WFH embrace.

    • Posted by jimbo

      i dont know anyone leaving the Bay Area, but know quite a few who are looking outside of SF. most of my friends have young kids and have thought about leaving before. Now after 3 months without a yard and without playgrounds, those houses in Marin and the East Bay have become much more attractive. I also have a good friend who is a RE agent in Marin and said hes seeing lots of SF families looking at places there. of course this is anecdotal, but we will see.

      I looked at places in Marin 7 years ago but my wife wouldn’t go for it. Shes a POC and swore to me she was getting a lot of stares at the open houses. i didnt notice but the defacto segregated schools is a negative for our family, even if they are ranked significantly higher than SF

      • Posted by wilson

        The factors for the young and single are different than for those with family. Stuck in a small expensive apartment with no bars, clubs or face to face dating anecdotally it has been a no brainer to go back home. I was surprised not to see more out of state migration in the WSJ graphics. But since the graphic only shows people who migrated from SF to another urban center, maybe mom & dad often live in suburban or rural areas.

        The link tipster posted on another thread also confirms my anecdotal experience that the young professional class seems to have no problem just bailing and breaking a lease vs the blue collar/service workers being more likely to stay and not pay availing themselves of the eviction moratorium. Tipsters link also points out that rent from a broken lease is technically still owed (unless the vacancy is filled) even if people vacate. But I have severe doubts about the collectibility of any of this pandemic back rent. Also anecdotally, the biggest barrier to leaving seems to be how to get home. Even those who think that they are young and invincible worry about becoming a carrier and taking the virus home. Air travel seems risky. Not everyone has a car and a long road trip has its own risks.

        When the first news articles and anecdotes of people leaving came out and posters here asked for hard data, I wondered what data they were expecting. Census data is probably a year+ out and is just a single point in time. This cell phone tracking is a pretty clever idea. Scary from a privacy standpoint, but it is continuous and near real time. If you google the data provider in the WSJ article they have lowered their paywall for a subset of their data because of COVID. Interesting stuff.

  8. Posted by wilson

    Not just one off freebies like complimentary rent. Asking rents are just a landlords initial offer. When people are lined up to rent every open apartment demand usually pushes rents up over asking. But now WSJ just reported that in NYC average actual rent is 8% below asking. Don’t know where to find actual vs asking rent data for SF, but you can bet something similar is happening here.

    11% down from peak in asking price, 11% first year discount plus probably a double digit drop in actual vs asking price. Looks like a pretty hard hit so far.

  9. Posted by jimmythekid

    San Francisco is run by complete incompetents the BOS are insane. Homelessness is a disgrace. Drug addicts defecation in the streets.Only those with a vested interest are still trying to pimp out SF as some kind of world class city. Does anyone know a way to short SF real estate?

    • Posted by Brahma (incensed renter)

      You could sell a bunch of those housing futures contracts based on the S&P/Case-Shiller index for the San Francisco MSA which are trading on the Chicago Mercantile Exchange (CME), but S.F.’s homelessness and drug addict problems are probably already priced in.

      • Posted by Tony Timpa

        You can’t, actually, go sell a bunch of those housing futures contracts.

        The city-specific ones trade only hypothetically, and the volume in the overall housing market contract is so small as to be meaningless.

        The contracts never caught on, from what I have gathered.

        • Posted by xyzzy
          • Posted by Tony Timpa

            You have cited the WordPress blog from the semi-retired guy who claims to be the market in Case Shiller futures. So, based on your careful research, please let me know how to short $5mm notional of San Francisco housing contracts? What is the current volume in the front month contract? Daily trading volume?

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