The weighted average asking rent for an apartment in San Francisco, including one-off rentals as well as units in larger developments, slipped another (1) percent over the past month with a bit of seasonality in play and now measures around $4,250 per month having peaked at around $4,450 per month back in the fourth quarter of 2015.
And the average asking rent for a one-bedroom in the city is now holding at around $3,550 per month, which is around one (1) percent lower than at the same time last year.
At the same time, the weighted average asking rent for an apartment in Oakland has ticked up a couple percent to around $2,925 a month, which is within two percentage points of its peak in the second quarter of 2016 and nearly 12 percent higher than at the same time last year, with the average asking rent for a one-bedroom having ticked up to around $2,500 a month.
Our latest trends analysis is based on pricing data from nearly 3,800 past and active apartment listings in San Francisco and Oakland combined and for which the “weighted average” apartment totals 2.4 bedrooms when counting a studio as having one.
And the premium for a one-bedroom in San Francisco as compared to Oakland has been holding at 30 percent over the past quarter but is down from nearly 40 percent at the same time last year.
Doesn’t surprise me about Oakland…there’s a lot of new product coming on the market downtown right now, so that will skew the average up.
But according to the economists who post here, the inviolable Law of Supply & Demand dictates that more market-rate supply will ease upward pressure on all market segments.
At least, that’s why they say we have to allow unlimited amounts of market-rate units to come on line.
I know that the realtors, developers, and landlords who post here are mainly concerned with addressing the lack of affordable housing, so I trust that they are arguing in good faith that unfettered market-rate production will make housing more affordable.
In the phrase ‘asking rents’, “Asking” is the key to deciding what – if any – value this metric actually has…the economists step forward when no one answers “I’ll take it” (at least at the initial price.)
As socketsite would say “mix”. There is a lot of brand new expensive product coming on the market in Oakland, so that will skew the averages for available units on the rental market, because there are a lot of older and not very nice apartments in Oakland. In fact, the new product SHOULD ease upward pressure on other market segments, particularly those segments that are not proximate and don’t benefit from the overall neighborhood improvements downtown (most people, more streetlife, more retail businesses, etc). So, perhaps a neighborhood in East Oakland is experiences a tad LESS gentrification pressure than it otherwise would because there are a whole bunch available apartments downtown. In short, yes the law of supply and demand is actually a thing.
It’s all right there, more market-rate supply in Oakland has eased pressure in San Francisco.
Every single one of the developments in Oakland are providing incentives from 6 weeks of free rent to half-off during construction.
You aren’t kidding. I just did a craigslist search for all of Oakland, then narrowed the search to listing with the word “Free”. 1/3 of the listings have 4-8 weeks free rent, 6 months free parking, even a cruise. People will do that in a final desperate attempt to hold their prices, but it never lasts.
I don’t have any particular insight into the situation in Oakland, but there are some newly developed rental housing complexes in the South Bay that I’ve been following that have held the line on their asking rents for years without lowering them and having multiple vacant units available. Never is a long, long time. Landlords can deduct their losses from their taxes.
“Landlords can deduct their losses from their taxes.”
Yet another of the many reasons why the theory* of supply and demand doesn’t accurately model real estate prices.
What the theory of supply and demand is especially good for, though, is beating legislators over the head with a poorly-understood and frequently misused academic shibboleth in order to obtain favorable opportunities for real estate gouging.
*Anyone who unironically refers to supply & demand as a “law” doesn’t know the first thing about what constitutes a scientific law, and should be permanently barred from discussing the social sciences.
Landlords do not deduct losses from their taxes. Losses are deducted from income, potentially lowering one’s taxes.
And of course also LOWERING ONE’S INCOME. This delusion that it’s somehow beneficial to incur (actual) losses “for tax purposes” seems to never die.