Despite the fact that the weighted average asking rent for an apartment in San Francisco is already down over 10 percent on a year-over-year basis and offers of complimentary rent are on the rise, vacancy rates are still ticking up and the number of apartments listed for rent in the city, including one-off rentals as well as units in larger developments, continues to rise.

As is the case with for sale inventory in the city, there are now over twice as many apartments listed for rent in San Francisco than there were at the same time last year.

And in fact, having ticked up another 10 percent over the past couple of weeks alone, listing activity for rentals in San Francisco has jumped over 50 percent since the end of February, all of which points to more downward pressure on both asking and effective rents.

72 thoughts on “Weakness in San Francisco’s Rental Market Is Accelerating”
      1. This recession will do more to make housing affordable than an entire generation of Supervisors, planners, and inept City policies has done.
        So definitely Yay!!!

        1. dive dive, dive, it’s time the real estate owners take it in the shorts, they have been phvcking the public for 3 decades
          payback is a b*tch, now clean out city hall

          1. OK. Now that the blood will soon be in the streets…
            Is it time for all the crybabies to pony up and find that house in SF you always wanted on the cheap?
            Or, are you going to cry in your soup in 3 years when things come back and you all lament what you could have brought in 2020?

  1. Buy that $1,000,000 one bedroom condo in SOMA that you will only be able to rent for $2,000/mo.

    1. I don’t think it’ll get that bad, but you do have a point. Some of our newer “neighborhoods” in SF are not really neighborhoods, they’re more like industrial/commercial areas with housing. They lack many (and perhaps most) of the things that make a neighborhood a desirable place to live. What they have is proximity to offices, and not to much else.

      In a world where many, perhaps most, work from home and don’t go into the office frequently, why would anyone want to live in gritty SOMA? I do think that property values as well as rents there may be pretty low until or unless things return to a “normal” that’s reminiscent of the past. That may be a while.

      I don’t see $2,000/mo, but $2,500 wouldn’t shock me at some point. But who knows, you might be right.

      1. Pretty wild how the city which spends all its time debating planning has totally whiffed on the plan for every single new neighborhood.

        1. We value talk more action. Discussion of style more than delivery of substance.
          Good neighborhoods develop over time. They will knit themselves into the urban fabric and be fine in 10-20 years.

        1. A cool neighborhood is linked to smaller lot sizes, in my humble opinion. Too bad our “leaders” didn’t encourage subdivision in Mission Bay and parts of SOMA.

          Regarding rents – people love to pile on and blame landlords, but have never been in their shoes. A lot of them are trying to do good for their families and are reasonable people. It’s interesting to read comments on how landlords have been “taking advantage” of people for years. There are tons of cases where this is true, but that is still a drop in the bucket compared to the number of good landlords. People abuse rent control, destroy apartments, etc, but no responsibility taken there or reasonable empathy applied. Renting an apartment is a transaction and both sides have free will. Retool your skills if you can’t afford rent. There is no entitlement for people to live anywhere they want. I’ve had to make lateral moves- even a large step back.

          In the end, the regulatory downward pressure on rents will slowly force rental unit conversion to private homes, constraining supply. Not a good long term plan – but good for votes. Rents will pop up again. Working from home is a fad. Companies hate it in “normal” times because productivity is low. Humans need real interaction. I worked from home and it was terrible after a while. A certain % can do it and are ok with being passed over for most promotions. With all that said, if you can get into an awesome rent controlled place for a good price, do it. I have not seen high end rents really decrease yet. People don’t want to work from home in a small, dark dump and restaurants and nightlife will open, eventually. There is no fundamental change.

      2. i can definitely see $2000 or lower happening for a 1bdr in SOMA. on top of the pandemic, the street conditions with the mentally unstable and addicts are taking over much of SOMA and there are reported increases since they’ve started sweeping up the TL. One benefit of living in SOMA was being near downtown or mid-market offices.

    2. As one of those “evil” money grubbing landlords trying to rent a 2-bedroom condo in South Beach in a full amenities concierge building, when renters start whining about high rents my response is that I will happily lower our monthly rental price by 30% and offer renters a NNN (triple net) lease. Then the renters start to understand the real situation. They get to pay the $1,150 per month in HOA dues, the $1,500 per month in property taxes, the $150 per month in insurance costs, as well as being completely responsible for the maintenance and upkeep if the unit. On top of that the downtrodden renters can be responsible for HOA assessments if the building needs a new HVAC plant, a new roof, or if the building becomes structurally unsound.

      My guess is that the whining about rental costs would cease in a hurry if the renters better understood the costs. Better to ask the fundamental question – what the H*** is the City doing with the tax money?

      1. Yes. If you’re a landlord in SF, the Bay Area or California you are assumed guilty. It is especially tough for small time landlords (as I am) who generally are just as “good” people as their tenants. I exchanged my California properties for out of state rentals and have not looked back. That was 5 years ago and from experience I’ve learned that not every region is as anti-landlord as California. The more balanced landlord/tenant relationship I now have is a breath of fresh air from what I went through (at times) being a landlord in California. Good luck with your South Beach rental.

    1. Why is there a decline in said Yimbysaurus? One of the goals…more affordable housing…is being met. It still doesn’t negate their critique of the REAL dinosaurs: the Freeze Everything in Amber Geezersaurus Nimbydom.

      1. “Affordable” is a relative term – cost/income – and while we seem to be seeing the numerator falling, we also need data on the denominator (HINT: unemployed people often have less income [and] “less” specifically includes “zero”)

        So as with any mass extinction event, we’ll have to wait until the dust settles to see the impact.

        1. This is spot on—a sizeable drop in rental prices doesn’t mean much for folks who are unemployed or have their wages/tips cut in half due to a pandemic.

    2. Are you suggesting that there’s a sudden absence of people pushing development in a declining market? That’s so weird. I wonder if there’s some reason… like, taking a pragmatic approach to changing facts, that the immediate agenda of a particular group might change.

      Assuming you stand for the counter-point (as opposed to just posting to troll), how is the NIMBY agenda being met right now? Are you going to use the market effects of a short-term global pandemic to justify your proffered housing policy for the next two decades?

  2. Real estate is very sticky on the way down. You have a bunch of landlords with extremely high costs (cough, Lumina, cough) advertising their units at breakeven, while they just continue to pile up on the market, priced far above everything else. Those landlords will all be selling in September, when all hopes of finding “just one more sucker” to lock in a lease for a year have evaporated, and those non deductible property taxes are coming due. It’s just laughable when I see photos of a gym in a listing. Like the big condo and apartment complexes think you should pay more for a gym behind locked doors that will never open. No one is going to pay a premium for that photo.

    In the meantime, people are absolutely flying out of the city. Especially those with jobs requiring them to work in the south bay, as they don’t want to be stuck on crowded trains, or on Muni buses, almost all of which Muni just announced they are canceling permanently.

    That’s right, there will be no bus service because there are no amenities to bus to. No restaurants, no movies, no gyms, no nothing. Meanwhile, an apartment in some suburb of Las Vegas also has the exact equivalent amenities: none, and costs half as much. Anyone who can work from home has made the same calculation. No sense in staying when everything is closed, stores are boarded up and 6 year olds are being shot at birthday parties as the police are defunded and demoralized. Crime is already starting to increase.

    Caltrain is next: they don’t even have the fares to run two trains a day each way. The cities that fund it are being decimated in their sales taxes, and soon, property taxes, and the state is getting hammered on income taxes and unemployment, so there’s no money to fund Caltrain much longer. Prepare to see that system entirely shut down. Plan on 3 hours on a crowded bus. Want to stick around in SF so you can get takeout at a dwindling handful of restaurants and spend 6 hours a day commuting? People are bailing. Maybe you’re here for the singles scene? Ha.

    As restaurant leases expire, they will be shut down entirely. Same with gyms. They are only sitting there because of the lease. The gym caty corner to caltrain must have been on a month to month lease due to the planned development, because it’s completely emptied out. There are retail vacancies all over. Want to pay a premium for that?

    As apartment and condo leases expire, more and more renters will leave the city and more and more rents will be uneconomic to their owners, causing more landlords to sell. But this all will take years to play out. Right now it’s investors and second home owners who don’t want an apartment that has no amenities. Owner occupiers are making the same calculation as renters, but don’t have an event like a lease renewal to force their hands and will start to leave in earnest next year when they realize they could be living in a place twice the size in a flyover state, and apartments in cities are just totally obsolete. Phoenix prices are up 10% YOY, investors will not stick around here when there are gains to be made elsewhere.

    Real estate is always sticky on the way down. What you are seeing is the tip of the iceberg. The financial crisis started in 2008 and prices didn’t bottom until 2010/2011. We’re not even 4 months into this. A long way away from the bottom.

    1. Agree with your analysis, but think there’s one point that is completely underestimated. In prior crises, SF/SV bounced back (or even accelerated as from 2011 onwards) due to the unique tech ecosystem that created this influx. This is currently massively eroded and will continue as many techies have been very eager to leave. With WFH, distributed workforces and a relevant set of companies settling elsewhere, the talent is finally free to move.

      With the eruption of the strong network effects, SF will lose every unique benefit – ignoring nature as it is overshadowed with the daily cesspool and city corruption. I have doubts that SF will bounce back this time. Don’t know anyone who is convinced that staying is the only/ preferred option.

      Old SF will get “their” city back and the local gov will depend on state and fed to survive as taxes and all the free goodies (infrastructure, donations etc.) from tech companies will be no longer there.

    2. Wow pretty dystopian view on the future of SF. While I’m normally an optimist, I do feel much of your post will ring true. If city is still mostly shut down by October and kids are still being home schooled. You can count on a mass exodus since I’m skeptical any company will make it a requirement for employees to be back in the office before the end of the year and most companies will begin to use WFH/ Work from Anywhere as the new recruiting tool. No more free lunches, but who cares you can now work from anywhere

      1. Work From Home is not going to last forever. As soon as a company misses its numbers for a couple of quarters, management is going to want everyone working together in an office so they can figure out what is going on. People working from their homes in Phoenix will realize that they are not going to get the same promotion opportunities as their peers working in an office in San Francisco alongside the boss.

        Things may well go in the direction tipster outlines above until the pandemic is over, but I don’t see why things will not rebound (whether slowly or quickly) after that. The Bay Area’s weather, great outdoor spaces (both immediate and within a reasonably short drive), and world-class universities turning out engineers and entrepreneurs are what got us here, and they will get us back here.

        1. That depends a lot on why profit numbers are being missed. Don’t forget that there are two ways to increase profit. Increase revenue or decrease expenses. This pandemic is taking a huge economic toll with off the charts unemployment. That is bound to drag down consumer spending and all the advertising and other business spending that supports the consumer economy.

          So the “What’s going on” might be pretty obvious. The business question will be “Can we increase revenue to compensate by bringing everyone back into an urban office space?” If not, the answer might be to reduce expenses. And employment costs and RE costs are usually big line items in the expense category.

          Unitied airlines just announced a plan to layoff 36,000 employees. Do you really think that pulling them all into some high priced coastal office space would have them come up with a way to get people flying again?

          The harsh reality is that expenses are real and suck out cash every month. Innovation has a high potential benefit, but it is costly and quite often fails. And what fraction of a workforce even has the potential to create an innovation that will offset a demand drop? Even in tech companies there are many more worker bees who code & test what has been designed and planned by a much smaller group.

          1. To be clear, I am not at all suggesting that companies with poor performance are going to try to pull everyone back in the office while the pandemic is still raging, or that having people in the office is going to solve pandemic-driven drops in consumer demand. I am responding to the view of tipster and others that office work isn’t coming back the way it was before even after the pandemic is over, which I don’t buy. Post-pandemic, a company that starts to have performance issues (e.g., missing a product launch) is I think likely to want to have people back in the office and collaborating together since it is much easier to diagnose and solve organizational problems when you have the team together during the workday.

          2. I hear you, but I think that for a while post pandemic a lot of making the numbers is going to be about cutting expenses. Even back in the face to face days schedules and ship dates slipped. And not every shipped product is a success and contributes meaningfully to profit.
            The finance folks are going to need to make some pretty tough decisions going forward. An expense cut is guaranteed and immediate. Spending on high cost salaries and real estate because it might help speed up a product launch which might be successful which might bring in profits sometime in the future is an uncertain nebulous future benefit. The latter is going to be a hard sell to the finance folk for a while.

          3. Agreed. If Covid teaches us anything it will be how much previously done in an office can now actually be done at home. There will be people coming back to offices eventually but the office footprint will be significantly less. Additionally, teams of sales people that need to be in a local market for meetings, etc that will be paired down since where will there customers be (probably WFH). I can tell you first hand that pre-covid many of my contacts were already working from home (At least that’s what they were telling me. ?) making it difficult for face to face interactions. Now even more so.

      2. most companies will not be doing office work until at least next spring. OCt-March will be the worst of the pandemic

  3. More Republican nonsense. Stopped reading when you blamed a July 4 shooting on “defunding the police” which has not happened yet in any form. What’s our 900mil police/sheriff budget worth? You think the fully funded police are doing a GOOD JOB?

    1. Don’t see the blaming there. He just pointed out that crime is already increasing. Most likely due to economic conditions, crushing unemployment from the pandemic you know. And then on top of that defunding police will only make things worse.

      1. The SFPD has done nothing to improve our homelessness, mental health, drug abuse, and housing crises. They take 800+ million a year and line their pockets (many living outside SF), while schools, healthcare, homeless shelter, housing budgets, etc. are skimped on. Far past time to reverse that.

        1. no one can honestly claim that we skimp on homeless spending. agree the rest are skimped on.

          the police could help with drug abuse, if the DA would prosecute dealers. its a waste of resources to arrest the same fentanyl dealer 7x in one year without any jail time. Im am very strongly in favor of sanctuary policy but there are limits. If an undocumented immigrant is caught 2x times selling fentanyl, they should be turned over to ICE. The drug market is run by cartels in SF, and our policies are supporting the cartels

          1. Much of what our police do is respond to quality of life calls, ie. 911 call on homeless people for encampments, noise, drug use, etc. SFPD has zero real tools to fix this (an arrest is NOT a solution; it’s a threat)—but we could divert all that spending to navigation centers, healthcare, and housing, which are all proven to work much better.

          2. I agree that much of SFPD officers do is respond to quality of life calls, but that is because quality of life is such an ongoing issue in S.F. The mistake Hunter is making is assuming that if the SFPD budget is cut, that the resulting savings will be effectively spent to improve the quality of life of San Franciscans.

            S.F. residents should be scared to see what will happen if, as the Mayor promised, Police no longer will respond to calls for help with the homeless. SFPD now receives about 40,000 calls a year about homeless people living on the streets.

            If the police, who have the ability to arrest non-compliant homeless addicts for example, are replaced by low-paid social workers who do not have the ability to compel compliance, I don’t understand how the spread of homeless encampments will be controlled. Social workers can’t compel people to go to a shelter or a navigation center and can’t force cleanups of encampments while homeless people are present, as police can.

            Saying the police don’t have the tools to fix homeless encampments, noise caused by homeless people late at night, drug use by homeless people and so on is true, but that doesn’t mean that the folks working for the Department of Public Health or the Department of Homelessness and Supportive Housing can make housing appear upon demand with funding obtained by cutting the police budget: they can’t. Cutting SFPD’s budget will just reduce public safety and that will in turn reduce property values as hard-working middle class residents flee for the suburbs.

    2. It doesn’t matter if the job they are doing is good, bad or ugly, sales tax revenues are down and everything is going to get defunded. Police, fire, everything. You’ll see needles in the parks all over. Poop won’t be cleaned from the streets for days. Homeless camps will fester for months, collecting garbage and urine. I doubt any of that is good for property values, compounding the fact that people are flooding out of the city.

      That’s just the reality of the situation. We’ve set up the city for high costs and now the sales tax money that paid for it all is gone. Call for a paramedic and you’ll be told to wait.

      Uber is looking at moving to Dallas, Schwab is already building a headquarters there, Juul is moving to Washington DC and laying off, and Postmates will certainly be shut down, along with thousands of startups surviving on PPP money for a few more weeks, Twitter and Stripe are bailing. Even Levi Strauss is laying off 700. Once they go, the losses to the city treasury will be permanent.

      1. Most of the companies you mention are only a decade old. This is only a permanent loss if you lack imagination. Losing Uber and Juul in particular is a good thing. The city cutting budgets is also a good thing. Whether they do a good job of it is another question, but it needs to be done.

      2. Uber is a scam that has no path to profitability. Juul peddles poison. So much of the tech economy is a chimera or a scam or ephemeral nonsense.

      3. Spot on. Cities are facing massive budget shortfalls and everything will get cut. NYC is looking at laying off 22,000 city workers. Mayors are getting on the ‘defund the police’ bandwagon to turn a finance disaster into a PR win. City workers often live in the city they work for and I’d expect the civic layoffs to increase the pace of deurbanization. So far the market looks like its ignoring the pandemic, but if the market takes a hit its going to be nuclear for many city/state pension systems.

  4. There is always crime, it has nothing to do with the current debate on police funding. SF only spends 10% of it’s budget on police. Most cities in the Bay spend 30% plus. There are policy failures on what police enforce in SF, and that affects real estate prices, but there is zero issue with amount of police funding in SF.

    Caltrain has been there 100+ years. Through many worse crisis. Service might be cut back in the short term, but those trains will still be running long after every we are all gone.

    Yes, real estate is sticky on the way down. I too give it 2-3 years to hit bottom before it bounces. But SF is not Detroit. Not even close.

      1. And San Francisco’s concern is manifested in the story’s ranking: 5th…right after “Feral peacock in Bay Area neighborhood incites Nextdoor battle”.

        That having been said I think Pablito’s point of longevity – actually more like ~160 years – should carry a little weight; the key is phasing the return of service (if it should be cut) to a slowly returning ridership.

  5. Excellent analysis above by tipster. Prior to Covid the megatrend was a shift if tech jobs and population out of the Bay Area. The pandemic will accurate this. San Francisco, like NYC, is particular vulnerable as public transportations shrinks and becomes less attractive to workers. HSR will never come to the TTC and now it’s a good bet Caltrain won’t either. The quality of life has been deteriorating in SF for a while now. SFis, per Wallet Hub, the second worst run city in the US. Based on 38 metrics such as road conations and long term debt. The answer? 5 or 6 tax increases being considered for the fall ballot including a gross receipts tax increase which will only stifle any small business green recovery in SF. This in a relatively small city that has the highest paid mayor of any city in the US.

    SF will see a significant population drop over the coming years. To a more historic and sustainable level. Tech companies will shift workforce out of the city and many will move their offices from SF as well. It’s likely SF will see a significant contraction in its tech job base which will worsen things as these jobs payed well and kept alive the demand for avocado toast. Of course all those things that made SF “attractive” to younger workers will be years coming back. In the end this will be good for SF and for the country more generally. The move to a more distributed workforce and population centers is “green” and San Francisco is just too geographically small and isolated (on the tip of a peninsula) to be a major job hub in the emerging post-pandemic America..

  6. Tipster,

    Honest question; What is keeping you here? You obviously hate it, everyone can work from anywhere, housing is cheaper elsewhere, and no amenities are ever coming back, poop. Why stay?

    1. Many of California’s long term problems would be solved if population was smaller. So, if the mercenary conservatives here to get rich would relocate… There are simply too many people crowded into a drought-prone, seismically dangerous environment. If I were rich I would volunteer to pay for their moving costs.

      Remember: eternal growth is the ideology of the cancer cell.

    2. Long commercial leases. I run several businesses.

      If I weren’t locked into them, I’d have left in April, for Arizona or Texas. The virus is raging there, but it raged in NYC and now they have almost no cases. If you stay inside and ride the waves out, it will be safer than here, and I have to stay inside here anyway because everything is shut down and everything is just depressing outdoors anyway. 3 bedroom house with a pool in Scottsdale and you’re looking at $750K, property taxes and insurance run $500/mo. Solar installed, so no utilities. Budget $200/mo in maintenance.

      1. Don’t forget the state tax rates. No state income tax in Texas and 2.59% – 4.5% rate in Arizona. Compared to California’s 7.25% – 13.3%.

          1. 4000 square foot home on a third of an acre in North Dallas: Price $750K. Monthly property taxes $1456.

            3000 square foot home on a 3000 square foot lot in Jordan Park in San Francisco. Price 2.8M. Monthly property taxes: $2842.

            Property taxes are nearly double in San Francisco, for less property. Whatever point you were trying to make, I think applies to here, not there. Oh yeah, and your state income taxes are 0 in Dallas. I’m sure I can spare a couple of quarters for toll roads.

          2. the rate is not too worrisome when home prices are less than 1/3 in Dallas than they are here

          1. Jordan Park vs. Dallas? Why not also compare Atherton to Tulsa? Or Mill Valley to Huntsville? I have been to Dallas several times and couldn’t wait to leave each time. I have family there who moved from California a few years ago and regret it. I think there are still going to be plenty who prefer to live amongst educated people who are far less likely to feel their manhood is under assault by wearing a mask or that Jesus isn’t going to let the virus spread in a church. If people want to leave the Bay Area and move to a sh*thole because there is temporarily no way to enjoy all the restaurants, museums, etc., then more power to them I suppose – it will help people like me to buy a larger home.

      2. So you can’t just have zoom meeting where everyone works from home, with you hosting it from Phoenix? Weird I have been led to believe that absolutely everyone can do WFH.

      3. Scottsdale daily high/low temperatures this week:

        Friday: 111/89
        Saturday: 115/90
        Sunday: 116/90
        Monday: 112/88
        Tuesday: 111/88
        Wednesday: 111/88
        Thursday: 108/86

          1. Actually, no: humidity 19% Summer being the monsoon season in the DSW, when much of the rain falls…the annual amount being what the PNW might get in a weekend, don’t you know (apparently not)

        1. I love that heat. You have a pool and you spend a lot of time in it, and you’re active before and after work. People who live year round in Arizona are in great shape because of that lifestyle.

          If it were truly unbearable, it would not be growing by leaps and bounds. You’re thinking that you would try to keep the same lifestyle you have here and live there, but that’s not how it works. They still have drive in movie theaters where you show up at 8pm, everyone takes only the alternate spaces and you sit outside on a lawn chair in the space next to your car and watch the movie and drink beer. Same with Chicago on the other side of that equation, there’s tons to do indoors during the winter.

          Yes, Scottsdale is hot while you’re inside during the workday for a few weeks out of the year, but every place, including all the homes, is air conditioned. Note that while you’re inside here in the winter in the cold and rain, it’s sunny there, so it does balance out.

          1. “Scottsdale is hot while you’re inside during the workday for a few weeks out of the year…”

            Oh come on. You know what are not synonymous? The word “few” and the word “twenty.”

          2. What is being missed here is that people will be able to move to places they themselves find desirable. No one is proposing forced relocations to random locations. People that don’t like the heat will simply not move to places that get hot. I’ve worked with some people who grew up in very hot climates and miss it dearly and others who say “Good riddance”. Some people miss their families and would love to move back home and other find the distance a blessing. Some people like our temperate climate, some like the permanent sunshine of SoCal others the full compliment of the seasons with leaves in fall and snow in winter. It’s not a binary choice between SF and Scottsdale.

          3. @wilson nailed it – it’s not a binary choice. Boise is a millennial hot spot now. The seasons, plenty of water sports and a spectacular setting make it one of a myriad of examples besides Scottsdale. Like the Phoenix area, Boise is booming with a large influx of Californians seeking a better quality of life.

  7. zumper now reporting more detailed analysis of YoY rental price decreases by neighborhood, in addition to previous 11% citywide stats. SOMA is down 19% YoY. most neighbohoods are down. Some Trinity 1bdrs now listed for $2159. on the other end of the spectrum, Outer richmond is up by 11%. In general the further away from downtown, the less the hit and some increases. the premium to be close to downtown is fading fast

    1. “Outer richmond is up by 11%. In general the further away from downtown, the less the hit and some increases.”

      I’d agree, but I wonder how much of the increase in average price is mix. People were packing into some pretty small cramped units before and now large and spacious is whats hot.

    2. Be careful, Zumper doesn’t do a particularly good job of normalizing their stats and trend data for changes in mix, particularly for sub-areas like the Outer Richmond where there’s an increase in listing activity for larger, naturally more expensive, units.

      Also, the noted compression in prices should be giving one pause (versus being seen and/or positioned as a fundamental shift).

    3. Good tip on the neighborhood differences. Thank you. PS – it’s farther not further – just trying to help

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