San Francisco Rents Just Dropped Even MoreSeptember 28, 2020
Having slipped under $3,600 in August, the weighted average asking rent for an apartment in San Francisco has just dropped to under $3,400 a month, which is down nearly 6 percent over the past month alone (having dropped closer to 3 percent a month over the prior quarter), down over 20 percent on a year-over-year basis and nearly 25 percent below a 2015-era peak, driven by a sharp increase in vacancy rates (which had briefly waned earlier this month but has since started ticking back up).
As such, the average asking rent for an average apartment in the city, which measures 2.4 bedrooms when counting a studio as having one, is now 18 percent ($725 a month) cheaper than just seven months ago, with the average asking rent for a one-bedroom in the city having just dropped to around $2,800 a month (which is down from closer to $3,700 at peak).
At the same time, offers of complimentary rent and cash concessions haven’t waned, driving effective rents down even more.
And a we noted earlier this month, rents in Oakland are now dropping as well, with the average asking rent for an apartment in Oakland having just dropped to under $2,500 a month (versus nearly $3,000 a month at peak), which is down nearly 6 percent over the past month as well.
We’ll keep you posted and plugged-in.
Comments from Plugged-In Readers
Time to vote for new types of politicians ?
Because the rents are dropping?
From the point of view of those who acquire wealth via rental extraction from those who produce, falling rent indicates that the politicians they have bought off (which is most of them) aren’t waging top-down class war vigorously enough.
You know when you talk like that you generally drive away people that would otherwise like what you’re saying.
People don’t like to hear how their beliefs, occupations, and lifestyles are causing harm to others. It’s called cognitive dissonance.
People don’t like to read anonymous internet commenters try to shoehorn everything into a Marxist class-warfare view of the world.
I’m convinced that’s their goal. Not trying to win minds so much as keep people angry at eachother to justify further chaos.
Touché, James, you’re on to me. Everyone knows the proper way to “win minds” is by eviscerating their standard of living through low pay and high rent, and calling them names. Now, excuse me while I contact my boss Evil Dr Adolph Putin on my shoe phone for further instructions. Desvidanya.
The phenomenon of rent-seeking in connection with monopolies was first formally identified in 1967 by Gordon Tullock. We should take all the property and hold it in a planetary trust, then a solar system trust when we expand to Martian Colonies
I like how you cleverly use “first formally identified” as a way to omit mention of an obscure political economist named Adam Smith two centuries prior, who, along with another obscure political economist named David Ricardo, considered the lords of the land as the greatest impediment to the well-being of the people.
Creating housing — whether rental or for sale — is productive.
Renting out all manner of desired and needed products or services is productive.
Your thought processes appear rather impaired.
Perhaps you should limit your consumption to just “one beer”.
After all didn’t your hero, Marx, declare that drink was the scourge of the working classes?
And “two beers”,
Smith and Ricardo, along with their fellow classical economist, Henry George, were referring to “land rents” and monopolistic “rentier” behavior based upon speculative/nonproductive land ownership practices — not the productive housing that one might create upon the land and then either rent out or sell to others.
Accordingly, if your truly interested in addressing the root monopolistic behavior that has been driving up housing costs in SF, the Bay Area and throughout CA, then you should be going after NIMBY homeowners, who via their corruption of the political/regulatory process, having been stymieing new housing creation for decades which has the result of massively increasing the value of their homes (no matter how crappy) due to the resulting chronic scarcity. NIMBYs have been doing this over the better part of 40+ years and look where its go us — excessive housing costs, rampant homelessness and the highest poverty rate in the nation (the bulk of which is due to housing costs.)
Now, if you want to talk about something along the lines of George’s Land Value Tax (LVT) that could go along way toward mitigating this corruption and “rentier’/wealth-grabbing non-productive behavior, then I’m willing to have a discussion.
After all, persons with radically divergent ideological positions, e.g Vladimir Lenin and Milton Friedman, at least could agree that a LVT was a good idea — Lenin just thought it didn’t go far enough and Friedman gave it the backhanded complement that is was “the least worst tax.” That contrast alone should indicate the the average reasonable person that the LVT is worth pursuing.
The quandary for fiscally motivated voters is, do we keep the businessman, or do we hire the one who will more than likely be increasing taxes but whose empathy for humanity will more than likely do what it takes to finally acknowledge, and end the pandemic that has ravaged no only the human population but left the entire world in financial ruin.
That really isn’t a quandary.
No one person is going to end the pandemic. And no one person exacerbated it.
One person – DJT – very much did single-handedly exacerbate it. If he’d just kept his mouth shut (and masked) from day one and kept his little sausages off his Twitter keyboard, literally thousands of deaths could’ve been avoided. And that’s just without asking that he actually have taken proactive steps.
Nonsense, as in point of fact Trump withheld information during the months of January and February. That inaction exacerbated the pandemic.
Biden doesn’t have any empathy for humanity. Simply trying to buy votes by promising to transfer wealth from those who earn a living to those who don’t. A recipe for CA and the entire U.S. to become the next Venezuela. There is nothing Biden can do to rid Covid. Biden tried to label Trump as xenophobic for shutting down air traffic to China, only to acknowledge much later it was the right call.
No, actually, he didn’t say that Trump shutting down air traffic was xenophobic. He stated ““We are in the midst of a crisis with the coronavirus. We need to lead the way with science — not Donald Trump’s record of hysteria, xenophobia, and fear-mongering. He is the worst possible person to lead our country through a global health emergency.”
Biden never called Trump’s “Air Travel Ban” xenophobic or racist.
There’s something to be said about the leading party of our country caring more about the success of the rich than the conditions of the poor.
The rhetoric I’ve received only ever seems to be about how the rich pay the most taxes so they do the most for the economy and everyone else needs to try harder. Despite their lack of resources to go to a properly funded school, receive basic health care, let alone a roof over their head, there are still those who insist that those people just aren’t trying hard enough and they need to pick themselves up by the bootstraps (if they can even afford shoes after paying their taxes).
The redistribution of wealth doesn’t have to nor will it look like taking money from the rich and giving it to the poor but more like using the vast amount received in taxes (WITHOUT CUTS) to fund equity programs to give all US citizens the basic needs to lead successful careers so they can make money and pay taxes. They want the rest of Americans to pay more in taxes? Then make sure those Americans have nothing in the way that keeps them from pursuing good paying jobs to make an income and pay taxes. Universal health care, free higher education, low-income/government subsidized housing are just some of if not the most important foundations you could give any American for success.
A slight increase in taxes for top earners and companies is still a drop in the bucket to their actual profitability. Giving them tax breaks is a ridiculous idea in relation to the shear wealth their actually is. The middle class Americans who get taxed at the same rate based purely on income are seeing larger consequences by paying these taxes because in relation to the top earners they are not taking home enough money at the end of the day to have the lives the worked for. Those are the people who need tax breaks.
Some big assumptions you’ve made here…like, calling Trump a businessman. He’s an entertainer and personality who blows through loans and inheritance money. But you got it right about the empathy part.
Trump is not a “businessman”. He is a failed, con artist. I am so tired of you people who would throw half our country under the bus so that you can make some money. You need to check your morality, or lack there of.
+1. So many narcissistic sociopaths in the 1%. Time for a massive tax-code overhaul.
Uh…the businessman is a total fraud and if you believe otherwise you have your head in the sand.
Yes, I was using the word businessman, facetiously, because most people who voted for him wanted a “businessman” to run ( ruin ) the country.
$2,800 for a one bedroom?? Here in San Diego you can get a nice craftsman style two bedroom house with yard in North Park for $2,500. Still a long way to go.
You’d have to pay me to live in San Diego.
Given that prices there are substantially cheaper, that’s exactly what moving there would do!
Glibness aside, San Diego is a large city: unless your grudge against it is something endemic like climatic monotony, categorizing the whole area w/ one broad brush doesn’t seem very thoughtful.
That’s cool but SF is nowhere near worth $2,800 for a one bedroom. I moved away from SF in 2012 and I was paying $1,275 for a one bedroom on Lake St. It was expensive back then, but it has become a gilded landscape of the wealthy, service workers who commute 1-2 hours each way, and insane asylum escapees. And now with perpetual wildfires choking the air year round, asking $2,800 is ridiculous. $1,500 for a one bedroom is more on par. We’ll see what happens.
Keep in mind that the average asking rent for a one-bedroom in San Francisco was actually running around $2,500 a month back in 2012, at which point a studio was running around $2,100 a month and the overall average was closer to $2,700.
Asking rents then jumped around 9 percent in 2013, at which point the average asking rent for a studio in San Francisco hit $2,300 a month for the first time (and has since dropped back down to around $2,100 a month as of today).
Great site. Great stories. Very informative reader comments.
But one thing to bear in mind is that SF is very different from other big cities regarding the rental property pool. The professional managed unit rental market has always been a small part of the total rental market of SF for as long as I’ve been renting in SF. Since the 1980’s. Which is where you seem to get most of your market statistics.
For cities like Seattle, which I’ve also known very well since the early 1990’s, rental metrics based on the current numbers from the professional managed unit rental market actually does give you good ballpark numbers for the city rental market. In SF this number greatly overstates the current actual market clearing price for rentals.
Thirty years ago almost all non professionally managed SF rentals were in the classified of the Chron/Examiner. Today its still craigslist. Just like 20 years ago.
Based on the clearing price for rentals in craiglist the last few months, those listing that are rented in a few days, not listed for weeks / months, rents are down a good 25% / 30% over last year. As for where it goes next. Much much lower. To at least 2010 numbers in nominal terms. For starters.
This is going to be more like the crash of the early 1990’s than the early 2000’s. Not that the first Dot Com crash was shallow. My personal benchmark market, rental houses in the Sunset, only broke the price high-point of the summer of 2000 (in nominal prices) in 2014. I know this because I’ve been renting houses for extended periods of time in the Sunset since 1988. First house was $850, last house was $2350. Ten years ago.
Once you take the googlebus people out of the equation, why live in SF if the city is closed, dead and dangerous, better to live in MV area, there goes the segment of the rental market that made it so unbalanced supply/demand/high disposable income wise for the last 7 or 8 years.
In the longer run, lower prices for housing in SF is better for everyone. The renters that do stay get to upgrade to bigger/nicer place and/or pay lower price. The renters that left also benefit from bigger/nicer place and/or pay lower price.
Plenty of regular folks living and working in SF, I’m assuming you’re talking about tech people. Aren’t most of them doing what exactly we hope we or our children do? Get a decent education, interview well, and get a good paying job? What’s wrong with that? Tech (and biotech) is probably more meritocratic than many other high paying industries.
I used to work in finance and you see way more nepotism and favors dealing in that industry. I got tired of the corporate world so now I’m in service industry as a cook. You’re right SF is too expensive for a service worker so I live in Hayward instead. $1200 for a 1 bedroom place. Not terrible.
I am an electrician who was born and raised in San Francisco. I should not be forced to move out of my hometown to make way for tech bro’s. I do not agree with you on your assessment of the situation. I have seen the tech industry destroy the culture and the vibrancy of my hometown with the benefits of their existence only going to those people and entities that don’t need any more financial boosting. Not everybody wants to move and commute.
@lrd: Just because you lived in SF all your life doesn’t entitle you to live there forever. Cities change, all the time, for better or for worse. Nothing stays the same forever. I just don’t get hating on people for studying hard, getting good jobs, and then making money. Even if you don’t like those tech people culturally and socially, they DID everything right and by the book… Do we start punishing/hating people for trying to work good jobs now?
Last I hear an electrician is good pretty paying job so maybe you and your fellow electricians contribute to pushing out all the low wage service workers? Do we start hating on you since you’re likely much better off than a fast food cook or grocery store clerk? I hope not.
I know what I said probably won’t change how you feel and that’s okay. Take care.
lrd, congrats for being born and raised in San Francisco. Does that entitle you to permanently live here, at a price point you’re happy with, in accommodations you find suitable? If so, why?
Cities change. Some people won’t like the changes, other people will. Living here gets you “one vote” no more, no less. If you want to be able to exclude newcomers that you don’t approve of, maybe you could live in a gated community or something?
LOL @zac and @foggybeaches. The poor tech workers, being discriminated against by electricians. The ability of highly privileged people to portray themselves as victims is incredible. “Cities change” – sure, but if they change to the point where electricians, grocery store clerks, and musicians can’t live there, they aren’t cities anymore, just playgrounds for rich people.
And yes, the tech industry is extremely meritocratic. Any white man can rise to the top.
$1,275 for a 1-BR on Lake Street would not have been considered expensive in 2012. Not a steal, but certainly reasonable.
it wouldve certainly been a steal at less than 50% of going market rate for a 1bdr on lake st at the time
you were paying less than 50% of what an average 1bdr on lake st cost at the time
Apples to Oranges comparison.
I left SD for SF — the Sunshine Tax on wages prevents most people from affording that North Park place.
Interesting to see how free market can do to rent what Rent Board can’t do in its lifetime…
If by “free market” you mean pandemic caused by Republican lying, you still don’t know what the SFRB does.
and if you mean by free market, the subsidy of mortgage interest deduction and the all the nimbyism that goes on. Real estate has to be one of the least free markets of the market for goods.
The Rent Board was just reducing the impact of/ameliorating the problem which was caused by the free market. Interesting to see how members of the petite bourgeoisie confuse the response to a problem with cause.
The Rent Board is not the problem. The problem is San Francisco politicians/voters who seem to have decided that a real return that declines each year is acceptable to small landlords (a significant segment of the rentals in SF). It’s almost as if they think they can behave like the Fed.
It’s obviously better to be a bank or a SF public employee (3% raise).
You forgot the part where SF politicians and voters twist the arms of small landlords, forcing them to bid up and buy rent-controlled property that only pencils out if they can then kick long-time senior tenants to the curb and triple the rent or convert to AirBnB..
That’s garbage. No such thing is happening.
Exactly right. Look at the listings on craigslist since March, not sure where AJ’s info is coming from but I’ve seen numerous units that would have been rent-controlled housing stock, gussied up and furnished for short-term AirBnb occupancy now being offered for long-term occupancy instead.
I feel like the worst is over. I lowered rent 10% on some apartments a few months ago. I was able to fill two empty apartments last week at a decent rent with only a couple weeks of vacancy.
Over the years I’ve noticed that the hype and the real market are often quite different. I never got the crazy-high rent that sfgate screamed about in recent years, but I also don’t seem to be getting much pain on the down side.
I certainly hope you are right, but I don’t know for sure. I rented out a place in May and another one in July, both at the (very) slight increase because the previous tenants had been there on flat rents for several years. This time around, I have a 2/2 on the market and it just feels so much more difficult; Folks that came to see the place are just comparison shopping for fun.
Lower the price. It will get rented.
Probably cannot because of the mortgage/carrying cost overhead.. just a guess. I am guessing a lot of people got into the property market because of potential for high rental income/AirBNB (which in turn fed the housing bubble). Now with the changed situation, I am not sure many of those people have the deep pockets to ride this one out. But what do I know, I’ve been wrong more often than I can remember.
Another factor is maybe the rental prices were supported by high tech salaries. Where I work, we are undertaking a massive overhaul of “workspace” to enable remote commuting. I don’t expect everyone to remote-work, but maybe just enough people might consider to make a dent in the price support. For instance moving to Colorado is -18% off Bay Area base pay. Moving to Southern CA is -8%. Even with the salary reductions i believe it works out better financially remote commuting.
Another wave of exits is building up due to the fires/smoke. This has pushed many fence sitters we know over the edge to start looking elsewhere and we’re thinking about it too. It’s been getting worse every year and its not like there will be a vaccine for global warming.
But where will you go? Other than the insane asylum (correctly mentioned above) and an incompetent board of Supervisors (the progressives) I’d rather stay in SF.
Similarly, I had a handful of vacancies in April but had them filled by Aug. Down 20% from the highs which were top of the market. I’m anticipating a dire winter, stabilizing spring/summer and fall 2021 for an upturn when work returns.
I say enjoy the city now that it’s quiet, it much more liveable.
Your four month vacancy is a long time for any market.
I agree. I never saw those crazy-high rents in ’15 and thankfully have been able to get everything leased within two months, during the Pandemic.
It’s the large, professionally managed buildings that are highly sensitive to the market condition. Just look at the new Trinity advertising $1800 for 1 br with parking included. Smaller buildings were slower to raise the price in good times, and therefore doesn’t have to lower the price as much/fast.
I agree, the professionally managed buildings with their now-closed amenities were the ones skewing rental market statistics. Now they’re getting hammered. But I think the crisis is much softer for mom and pop landlords.
Observers have stated that cap rates are widening, too. If rents are down so drastically and cap rates are higher/wider, where are the cheap multi unit prices?
Cap rates up and income down equals lower prices. Add in a state and local government hostile to property owners and my guess is the trend line is down for some time. Hopefully there’s no refinance needed on a commercial property right now. Tough.
Real Estate speculators are having trouble. Someone call a Wambulance.
While we’re allowing some partisan steam to be blown off above, we’re going to reign in any comments below which aren’t directly, and substantively, related to local rents.
My daily tabs on SF apts (source: Zillow)
Date / Apt Units / Apt Units <=$3k
9/13- 2900 / 1420
9/14- 2903 / 1430
9/15- 2964 / 1483
9/16- 3015 / 1499
9/17- 3022 / 1521
9/18- 3035 / 1527
9/19- 3036 / 1533
9/20- 3040 / 1536
9/26- 3152 / –
9/27- 3154 / –
9/29- 3164 / 1607
9/30 – 3182 / 1617
Once again, we’re tracking at least 25 percent more inventory than a query of Zillow would suggest. And we wouldn’t get too hung up on daily deltas. But more meaningfully, “there are now nearly three times as many apartments listed for rent in San Francisco than there were at the same time last year (and climbing),” as we outlined three weeks ago and having foreshadowed back in May.
We know you’re tracking different data — but the trend should remain the same between your data set and Zillows. You are absolutely right, daily deltas don’t mean much vs rolling average, W-o-W, M-o-M and Y-o-Y statistics.
On April 2, I took a sampling of Trulia listings within the City of San Francisco:
There is now 65% more rental inventory than there was 6 months ago.
In general, yes. But not all data sets are created equal, particularly in the absolute (as evidenced by the fact that the Trulia and Zillow counts referenced above differ by ~50 percent).
And in fact, listing activity has actually doubled since early April with inventory now up over 60 percent over the past three months alone, as we outlined last month.
Jethro P. Tull we are for sure not “through the worst of it”.
I am a professional property manager in SF and the vacancy notices from tenants keep rising especially when leases expire. Tenants who do stay are demanding 20% or 25% rent reductions or they will give 30 day notice and the threats have teeth because they can send us endless lists of units that are better/cheaper.
I have a colleague that works at a much larger firm than mine and they have units only in older buildings – they are getting 4 vacancy notices for every unit they rent. So let’s all look at this with clear eyes – the rental market is contracting and contracting quickly.
We won’t see the bottom until the number of vacant units on the market levels out and that has not happened yet (thanks to usctrojan415 for that recent Zillow snapshot)
As we outlined three weeks ago, having foreshadowed back in May, “with listing activity having jumped another 70 percent over the past two months alone, there are now nearly three times as many apartments listed for rent in San Francisco than there were at the same time last year (and climbing).”
And in fact, we’re tracking at least 25 percent more inventory than queries of Zillow would suggest.
The difference is that you are a professional property manager and I am an individual landlord. Everything about your apartments is carefully designed by beancounters with an array of amenities for maximum rents, but you have no slippage or flexibility in this market.
Right? Well said Jethro.
I have 0 vacancy as a small potato for years now. Some tenant turnover is actually better for me since I can charge a bit higher rent (even in this market). But I’m not trying to push anyone out. I do hope they “graduate” to nicer places ( either renting or buying). We have good relationships.
Jethro P – No.
All the properties I manage in San Francisco are in older rent-controlled buildings with zero amenities (a few have parking) in places like Hayes Valley, Russian Hill and Noe Valley. My clients are all individual property owners probably much like yourself. My largest building has 4 units.
Perhaps a difference then is that as a professional manager you have to follow certain strict rules in renting to someone that can cause a distant, standoffish relationship to develop. For example, I’ll look up a tenant on the internet and that usually is all the background I need. But you probably require a file full of documents. I’ve seen the ads in craigslist from professionals telling prospective tenants to bring them the broomstick of the wicked witch of the west if they want an apartment and I think that confrontational beginning can cause friction later on.. I am just not seeing the sky falling here.
If you are in individual landlord and you’ve managed to keep your units occupied and/or the rents from dropping too much then you are likely doing a great job managing your properties and you probably haven’t been pushing the rents up near the market limit. But don’t make the mistake of extrapolating your anecdotal experience as being synonymous with what’s going on with the market overall.
Renting in SF ? why culture – museums, now closed, entertainment / bars music – closed -gatherings now virtual if at all, unique shopping- different one of a kind retail less each year because of rents, and now work at home in in a 400 ft studio, renting for $ + the outdoor experience of dirty streets, crazy homeless, increased crime, public transportation with covid .. Good luck with that Landlords.
San Francisco is opening up right now.
Until the COVID spikes this fall/winter
rents will plummet.
It’s a regional problem for sure.
But rents are just more expensive in “desirable” areas. Pick pretty much any city or “nicer” area in US or the world and you will pay more.
But I do think SF/Bay Area has gotten a way too crazy in rent last 4 or 5 of years.
So let’s keep building more supply in SF and the Bay Area to accommodate for more people and help reduce prices.
From Oct 1 2020, New York, San Francisco Rents Plunge in Work-at-Home Shift:
Emphasis mine. Something to think about when the permabulls on socketsite’s comment threads tell you that because of tech workers, San Francisco’s economy is resilient or that San Francisco’s economy doesn’t depend on tourism.
As far as home sales, I’m still waiting for the flood to show up on the commercial residential market. When you start seeing a lot of four unit multifamily buildings going up for sale and staying there, you’ll know that the mom and pop landlord crowd is throwing in the towel and decamping for Florida or Texas.
Multifamily home inventory is currently up 50 percent on a year-over-year basis and running at a 9-year high in the absolute, with the 10 most recently listed 2-4 unit buildings having been listed with an average CAP rate of over 4 percent.
In Related news: Rental Concession Ante Raised Again in San Francisco
UPDATE: Another Wave of Vacancies Poised to Roil the Market in S.F.
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