While the vacancy rate for larger, multi-unit apartment buildings in San Francisco had ticked up to around 6 percent in the second quarter of the year, representing around 9,000 vacant units as of the end of June, said rate was approaching 9 percent based on a review of 3,000 units, spread across ten buildings, that we compiled last month.
The average vacancy rate in those same ten buildings, which are located in Hayes Valley, Dogpatch, Mid-Market and Downtown, is now over 10 percent and climbing, with the vacancy rate in one big building, which had been fully occupied, having jumped from 5 percent to 16 percent over the past month and on-track for a vacancy rate of 20 percent by the end of November, as we projected last month.
And yes, rising vacancy rates continue to drive rents and investment property revenues down, with the average asking rent for a one-bedroom in San Francisco having dropped to under $2,800 a month for the first time since 2013 and the weighted average asking rent for an apartment in the city already down 23 percent on a year-over-year basis and 27 percent below the markets 2015-era peak.
We’ll keep you posted and plugged-in.
Wait a second, if 6% vacancy translates to 9000 unit, then SF has 150,000 rental units in “larger apartment buildings”?
Btw, I dont think the current vacancy is ONLY driven by COVID, got to be the over supply as well…
Good, lower rent is a positive for SF and Bay Area.
This city is filthy [and] the homeless are sleeping everywhere. That’s why we are leaving San Francisco.
Please move fast and as far as possible. And please never come back.
We might believe in different solutions but I hope we can disagree but still be able to have a discussion.
This kind of attitude is one of the many reasons SF continues it’s downward decline
I may disagree with Woody’s linkage of [his] two thoughts, but there’s no denying the first. The City gets more and more disgusting each year – which is simply abetted by empty storefronts and closed businesses.
The city is unlivable but for being an economic center and place of employment. With COVID, it doesn’t have to be a place of employment anymore.
I got my car window busted. My tires spiked and stuff stolen from my car. This was way back in 2011-12. I got the inkling of what was about to come and fled the city. From the point of dollars required to fix — the total damage was around $900 (all three incidents). But the amount of time I lost and the hassle to get the window/tires replaced — I probably lost about 6-8 hours over a week. And the inconvenience i had to suffer for lack of personal transportation .. stress etc. Its no longer a place I’d pay top dollar to live in.
@woody – you have a serious point and I’m sorry we’re losing residents due to the filthy street conditions. Half of SF does not have these conditions, those are the places that are pleasant to live in. Best wishes to you.
This City has to get a backbone and clean up these streeets. It’s going to make the vacancies worse.
I have several units coming up but a block away there are shanty towns. On one street we are religiously cleaning up the street, doing what DPW doesn’t do so that residents will rent.
I understand that your perspective is from your own. But being a Bay Area native and not being able to live in the city that I was born in is a problem.
People that have the means and bought up as many properties that they could to make a dime on the backs of hard working San Franciscans is a shame. I personally want all of the transplants to go to where they can get what they want but I don’t want them here.
Sell your ‘rental properties’ to locals who need it. Other then that, money mongering investment firms buying property to continue to drive prices up and outer influences need to be abolished in San Francisco. We need to take back our city and help our people.
I’d love to see SF make a commitment to housing for people who have lived here their entire lives. The most liberal city in the US ought to at least try something like that.
Be careful about throwing blame around though. My guess is that the major property owners in SF were born here too. Most of the landlords are probably third generation SF. The techies have made visible changes but most of the city is still old money thanks to Prop 13 if nothing else. And if you look at the city’s balance sheet you might find that much of it is dedicated to generous pensions for long time residents. Again this is a guess, and I’d be interested to hear numbers from somebody who understands the budgeting.
If the 10-yr Treasury rate was up to around 3.5% you wouldn’t have so many mom-n-pop landlords.
I can remember when the 10-year was above 3.5% and there were almost as many people arriving here from elsewhere with dollar signs in their eyes, trying to exploit workers here who for whatever reason couldn’t afford to buy, make their fortune and then take their winnings and depart for greener pastures. What’s supercharged this phenomenon since the late ’90’s is that geedheads from literally anywhere, out to make money in real estate, can look up values over the internet and decide to move here for the purpose of making money without having any connection to or knowledge of the area.
You won’t get the penny ante landlords here to come out and say it, but many of them get ego gratification and personal validation out of being a landlord, and for that reason they overvalue residential real estate as an asset class and that would remain true even if the yield on 10 year T-notes were substantially higher (which it should not be at the present, since the unemployment rate is currently 7.9 percent) than it is.
A lot of these people “that have means” worked their butt off for years and years and years, such as me. If I came to the bay area with $200 in my pocket in 2000, and now own 4 properties in the city, you should be able to do the same. I made and, more importantly, saved every penny of what I currently have.
I routinely work 60 hours a week for the past 20 years. How about you?
There is more to life than working your ass off and saving every penny and in the process spoiling it for others.
You just rode a wave, and worked too much. Boring.
what is the transplant cut off date? Is it only the recent ones who have to leave?
The problem is that most areas of the city have been impacted. There are tents in the Marina and homeless people wandering around Pac Heights and Presidio Heights too. And don’t get me started on the break-ins. Car break-ins, garage break-ins and increasingly hot prowl break-ins. In my opinion, when people start to feel unsafe (which is now happening) that’s when you have a real problem. Hopefully, leadership will wake up soon.
Based on the results of city propositions, SF voters appear to be moving further to the left. Every bond/tax proposal passed, new city department passed, lowering police staff passed, and most by large margins. Without a change in leadership or even pressure from voters for change, I don’t [see] the city changing course from a downward trajectory.
If vacancies are at an all time high, and homelessness is also high, then we must ask ourselves:
What is wrong with the economic model that encourages landlords to hold on to vacancies rather than house the homeless? The homeless are not a visual blight. They are living, breathing reminders of the means in which you make your money.
If you want your street cleaned, please send a Rolex via Tractor to 1155 Market St and they will be out with hoses and needle grabbers first thing Monday am.
Being born here doesn’t give you some kind of inherent right to live here. I’d love to help and try and find a solution to The City’s problems, but it isn’t easy when people like Rez literally tell me they don’t want me here.
Being born in the US confers citizenship and attendant privileges. Why shouldn’t a city take the same approach?
I’m not advocating this for the whole country, but it seems like an experiment worth trying and SF seems like the place to try it.
What would that look like? If you are an adult born in SF then you get first choice on all properties and the city subsidizes part of your rent. Would it be a lottery system like the BMR housing?
Housing subsidy makes sense. It’s certainly more sane than rent control. “First choice on all properties” is obviously nonsense.
Probably some combination of number of years lived here and fraction of your life here would determine eligibility and level of benefits? Probably there would be a means test for any kind of subsidy.
You’d have to run some numbers to see if you could make any kind of meaningful difference with a program like this, but I think there’s a social cost to displacing people and there has to be a better way to fight it than rent control. Given the topic of the site I expect most people to think that the city is made of buildings. But the living part of the city is made of people and connections between people.
There are probably 3000 or so 18 year old who were born here, lived here 100% of there life and have very little money. So there goes the entire annual new construction pipeline every year.
You seem to have a figured out a plan that won’t work, which is some strawman about indigent 18 year olds having their pick of the finest new construction. Perhaps there is something less extreme that is actually possible.
I think you do beautiful work. But your business model does involve selling SF to very wealthy people. There’s a saying about trying to convince people of things that would interfere with their livelihood so I’ll drop this.
It wasn’t meant to be a strawman, it was meant to be one simple example of why it won’t work. I didn’t mean to say the 18yo. would get all the new housing, just pointing out that the volume of natives vs. the amount of housing production. We already can’t accommodate doing enough to help people who need it and qualify for current programs, and we aren’t going to kick out non-natives from their houses to make room
Fair enough, my apologies.
As a counter point, the birth rate and death rate in SF are not that far apart and the death rate will be increasing for demographic reasons. You’re right, that still doesn’t allow enough space for new arrivals, and the city would die.
Could we keep 80% of the locals who want to stay? I’m not sure. What’s the current number?
True the birth and death rate aren’t far apart, although all the births are “locals”. I thought about it some more and maybe some subsidy where if you are born here you get $25/month for each year you lived here. It would help the young adults after college some, and help a 50 year old that much more. Then perhaps you can get it passed because the home owning parents will get on board with the tax as their kids not being able to stay in the city is a big concern, and of course the renters contingent will be for it.
There will be unintended consequences like overall rent going up some and probably a baby boom in the city (with not just locals having babies here). It should come with a means test as well.
I think Prop 13 feeds into the problem, whatever the initial intentions might have been. School districts are funded via property taxes. Then those districts which have higher market price base are likely to foster higher quality school districts further increasing their desirability. Eventually you get a feedback cycle that is preferential to certain areas. Couple that with easy lending/low rates, the feedback is likely to be even more active. Then of course the speculator pile-on begins. As long as the prices are shooting up, no one complains — but the housing/infrastructure crisis worsens. Its not for lack of land in California or SF Bayarea. Would the housing situation improve if school districts and transport infrastructure across the state were better funded which can disperse some of the housing pressure to elsewhere in the state?
Do we want stable housing or do we want to use house as a store of wealth? I am of the opinion that housing as a store of wealth (on a depreciating asset) is likely to turn sour in general for everyone. If you disagree, please chime in.
UPDATE: Studio Rents Just Dropped to 2011-Era Levels in San Francisco
If your future doesn’t have a corporate or government pension then it’s savings. It seems like the fed steadily lowered interest rates until investors and savers had to look elsewhere for decent returns, e.g., real estate. Being a landlord isn’t easy, squeezed between irresponsible local governments and tenants whose inflation adjusted income has been static for decades. Now, on the cusp of AI, it’s fat cats and starving dogs.
What happened to the “emergency” of rent control, and that a > 5% vacancy rate would severely limit – if not outright abolish – most of the rent control, uh, rules?