San Francisco Apartment Rents Back to 2014 PricingFebruary 7, 2017
Having dropped 5.6 percent over the past year, and 7.9 percent since a peak in the fourth quarter of 2015, the weighted average asking rent for an apartment in San Francisco – including one-off rentals as well as units in larger developments – is currently running around $4,100 a month, which is roughly equivalent to late 2014 pricing.
And while asking rents in Oakland have dropped 5 percent over the past year and closer to 8.4 percent since peaking in the fourth quarter of 2015 as well, the currently weighted average of $2,550 a month remains around mid-2015 pricing as Oakland rents jumped in the first half of that year.
Comments from Plugged-In Readers
we need more of this (and I say this as a property owner). let’s not forget how insane things were in 2015 – 20, 30 people showing up for a vacancy. clearly unsustainable. we are not facing a crash, but we are seeing a cool off. this is all very healthy.
True, but 4100/month is still too high for many. Seattle’s number is 2100/month and salaries are not much lower there than here. To see a real impact I’d think this number needs to fall to the mid to high 3000(s). There are people who rented 7/8 years ago and, due to rent control, pay significantly less than the current average rent. So no incentive to move and free up that part of the rental market held in place because of rent control.
Affordable housing is a good thing. Keep building. 🙂
It’s really not good at all for existing homeowners, is it?
A rise in cost of living is bad for everyone. Higher cost of living pushes out service workers, teachers, and healthare workers, which in turn increases the prices of goods and services.
Also, if you are home owner, wouldn’t you want your kids to be able to afford a home in your neighborhood someday?
as a homeowner, i welcome this and any softening in sales market as well. The sales market was virtually flat from 2009-2012 and i see that happening again in 2016-2019. But the market flew in 2013-2016, and would love to see that again in 2020-2023. We need a breather for the next leg up
We should be building more. It sounds as if our very minor building boom is ending, though.
Is it really ending? From what I understand new proposals are down compared to past years, those units will be coming online in ~4 years anyway. Some of this decline is probably due to the uncertainty around new Inclusionary housing requirements. We still have a lot of units coming online in SF, probably ~3.5k units each for 2017 and 2018. What’s really different from the past years is that Oakland is also expected to put numbers close to that, probably more like ~2k units/year.
Doubtful that the building is going to end. As Dave points out, while rents have dropped from the SF peak, they are still very high compared to the rest of the country and compared to historic norms.
I didn’t say the building would end, but our little mini building boom might. We should be producing more housing, not less. It looks like our funnel over the next 1-4 years is smaller.
The “boom” was indeed little when you consider Seattle has been producing 5K units for years now and will do so through at least 2025.
Its not just building more however. Seattle requires a 40% BMR component. SF just 25% and that figure was just recently put in place from a much lower threshold.
The housing built here has been generally unaffordable to many. Even hi-tech workers. This has pushed hi-tech folks to rent rooms in the neighborhoods and to add to the bad parking situation. And increase the danger to kids and others who walk.
Seattle has seen a more holistic development – one that has not so negatively impacted that city as has happened in SF. We can disagree on this, but building more and more uber expensive housing that sometimes is used as a second home is not good for SF. IMO the quality of life is continuing to deteriorate in SF in part because of inappropriate development. Add to that the failure of the City to maintain roads and provide for good public transit and you’ve got a big problem – or rather the City has a big problem.
And that’s the point with the incentive for developers to build even if rents/prices drop.
If it makes sense to build thousands of units per year at $2,100/month rent and we’re at $4,100, then there’s plenty of room for rents to drop and still give developers incentive to develop.
Dave, majority of the new housing is in the SOMA/Mission Bay neighborhoods, its hard to image quality of life is worse in other parts of the city because of these new developments. I really don’t think parking should be quality of life metric. Also how do you factor in new developments in Oakland and San Mateo and even Santa Clara? Seattle isn’t really located in a mega region like bay area, so sometimes its hard to compare.
What does Seattle have to do with this?
The point is that San Francisco’s mini housing boom is winding down. That’s a problem for SF. Seattle is irrelevant
Seattle is used as a point of reference. There are good booms and bad booms. SF’s ending mini-boom was a bad one IMO. For some of the reasons stated.
The startup contraction is a major factor for the softening in rents. The Bloomberg US startup index is down 38% from its recent high in June 2015 and is now back to levels first reached in May 2014.
SF never had a mini-housing boom. we went from very little development to a little more, but not enough development. we should be pumping out 6K units per year. But i do agree that we will be back below 3K per year for the next 4 years.
And parking is DEFINITELY a quality of life metric
Maybe a mini-boomlet? The point is that we had a little burst of creating housing the last few years. Now we’re back to the previous status quo.
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