With listing activity having spiked, the weighted average asking rent for an apartment in San Francisco has dropped another hundred dollars ($100), or roughly 3 percent, over the past two weeks and is now down to a little under $3,600 a month, continuing a trend which shouldn’t catch any plugged-in readers by surprise.

While $3,600 a month still isn’t “cheap,” it’s over 10 percent or $500 per month cheaper than just five months ago, 17 percent ($700) cheaper than at the same time last year and nearly 20 percent ($850) cheaper than a 2015-era peak of around $4,450 per month. And the average asking rent for a one-bedroom in the city, versus an average-sized apartment with 2.4 bedrooms when counting a studio as having one, is now back under $3,100 a month, having peaked at closer to $3,700, as well.

At the same time, offers of complimentary rent and cash concessions haven’t waned, driving effective rents down even more.  And as we noted last month when listed activity spiked, with over twice as many apartments now being advertised for rent in the city than there were at the same time last year, including one-off rentals as well as units in larger developments, expect even more downward pressure on both asking and effective rents in the near-term.

We’ll keep you posted and plugged-in.

35 thoughts on “Asking Rents in San Francisco Down Nearly 20% From Peak”
  1. The biggest surprise for me personally is that the peak happened in 2015…. one would think it is 2018 or 2019….

    1. Having looked at rentals in 2015, 2017 and 2019 with rents for comparable buildings increasing each time, I find this surprising as well.

      1. There are very few, reliable rental comps publicly available. Asking prices for rents as scraped from Craigslist, or Zumper really are not much good, as the final price goes unreported.

        1. While not a perfect substitute for effective rents, the trend in asking rents is not only meaningful, in terms of market strength and directionality, but important to understand.

      1. Interesting.. Also sample size of one, I just looked up my rental in Russian Hill, stuck in the range of $4150 to $4250 since 2015…

      2. I have a 2+Br that rented for $4900 in 2016, $4700 in 2018 and $4400 back in June. Feel very lucky to have gotten a tenant at that rent.

    2. That would be the logical assumption but I think there has been a lot of development in SOMA/Dogpatch areas that are weighing down prices (i.e. 1 bd mostly vs larger unit averages).

      1. We weight for changes in the unit mix. And in fact, prices for smaller units (studios and one-bedrooms) have actually dropped less than those with two bedrooms or more.

  2. It’s curious to see the comparison to commercial rates: despite a negative absorption YTD approaching
    2 Million s.f., rates are down only ~5%.

    Of course this may only be the beginning, since the peak was this year, rather than the 2015 indicated herein for residential.

    1. To the extent the negative absorption is companies leaving SF and vacating space that is still under lease (trying to sublease the space in the interim) there would not necessarily be a big immediate impact on rates. That would happen when the original lease expires or the space is subleased at a lesser rate. Not sure if that analysis is correct but it might provide a reason for the small decline in the rate. One example is Stripe which is moving its large workforce to SSF – did they have a long-term lease on the SF property they are leaving? They haven’t been there that long and the announced move was somewhat sudden.

      1. Thanks. I don’t doubt there are reasons – i meant “curious’ in a literal sense, not as a proxy for “suspicious” – and your allusion to the relative length of commercial relationships – which are often, if not in fact usually, for 5 years or more – as opposed to residential ones (frequently month-to-month) – is certainly a major factor.

        That having been said, the apparent lag of ~ four years was, I thought, worth comment.

  3. I own several rental homes in Trenton, Ohio and the market is on fire there. Rents up and, of 2010 homes managed by my PM, only 8 are available to rent. One of my homes went vacant at the end of July and is already re-rented. Rent went from $1400/month to $1525/month – for a 3 bed/2bath home on a large lot. Guess everyone is leaving SF for Trenton.

    1. Trenton has a population of 11,800… How is any PM going to manage 2010 homes? I guess he/she has the whole town?

      1. She manages homes in the corridor from Cincinnati to Dayton. Trenton is in between as are properties she manages for me in Hamilton. She is one of the top gun property managers in the country and the lion’s share of the properties she manages are for California owners such as myself…

      1. I had California rentals and wanted to invest into a more landlord friendly area. I considered a number of places and actually also invested in another city which was more of an appreciation play. Cincinnati (Trenton is a suburb) is a great place for investors seeking a solid ROI and not especially looking for big appreciation. I purchased 4 homes in Ohio as part of a 1031 exchange. B+ neighborhoods, large lots and the prices I paid ranged from 185K to 300K. No, I haven’t seen the homes in person. It was a virtual purchase but going in I was working with one of the best PMs in the country. It has turned out well. No tenant problems in the 5 years I’ve owned them and quick re-rentals when a property goes vacant.

        1. Thanks, appreciate the info. So it sounds like you settled on a PM you liked and selected based on the area they work in and recommended.

          1. The PM has lots of California clients and was out here for a real estate event. She came highly recommend but getting the chance to meet and talk with her in person sealed the deal. There were a number of areas I looked at (and bought in one of those in addition to Cincinnati). The areas came first and then getting a top notch local PM. A great PM does you no good in a sketchy market.

  4. What is the source of this data? How is the 20% figure calculated? Why should I trust this number at all?

    1. And according to Apartment List’s model, the average rent for a one-bedroom in San Francisco is currently $2,389 a month (which shouldn’t pass one’s smell test).

      Regardless, if you look a little closer at AL’s data, you might notice an effective peak around the fourth quarter of 2015, which then dropped through the end of 2016, started to recover in 2017 and then started dropping again, having returned to its 2015-era peak, last year.

      1. Their base-year rent data is horrible. For trend, it’s probably pretty good, though I don’t know how they deal with “free month’s rent” discounts. Zillow also has a new rental index based on repeated observations of the same unit.

  5. Our tenants (2 roommates) had one leave. The other was going to have to leave, as she could not find a new roommate and could not afford to stay. We cut her rent in half for the next 6 months. Better to have some income then no one in this market. And I cant imagine trying to find tenants right now. Its a renters market.

    1. Did you know that once you lower the rate you can’t re=raise again under SF rent control regs? How are you dealing with that?

  6. I think there’s a significant difference in market rent changes depending on neighborhood. Those neighborhoods (Mission Bay, South Beach) which were, arguably, only desirable because of their proximity to offices — they are now not desirable at all since nobody is going to the office. They have suffered, or perhaps enjoyed depending on your POV, big market declines. Nobody cares about living near an office they don’t go to.

    Other parts of the city, more established residential neighborhoods, have probably declined a little bit, but not nearly so much. At least that’s my anecdotal observation.

    Much of the published market rent data comes from large properties (i.e. a lot of the new construction high-rise and mid-rise buildings, largely in areas downtown and in or near Soma.) Correct me if I’m wrong, but I don’t think much, if any, of the data comes from smaller, independently-owned/managed properties, which together form the bulk of the rental market in the city.

    1. More anecdotes: as someone looking for a one-bed at the moment, the price drop is noticeable by close reading of a Craigslist ad, where a higher old price is sometimes still in the description, and the headline price is lower – usually $200 on a $2500 price – or the realtor’s own website listing still has the higher price. One very nice place I saw said they weren’t getting any interest until they dropped to the $2500 point.

      Looking at the city-wide maps on Zillow and such, the offerings are hugely clustered in the Tenderloin/Lower Nob Hill/SOMA areas. NOPA, Richmond, Sunset, almost nothing…

    2. …I don’t think much, if any, of the data comes from smaller, independently-owned/managed properties…

      That’s incorrect. And while the degree of change certainly varies by neighborhood, we’re comparing city-wide averages on the whole and there’s a ripple effect when any one area takes a hit (or becomes more attractive).

  7. Will be interesting when investors buy for Cashflow in SF versus appreciation. Believe it or not, even at these high rents, the property rarely pay for itself.

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