As we outlined two months ago, back in early July:

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.

Asking rents in San Francisco have since dropped another 7 percent and are now down over 20 percent from peak. And 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).

We’ll keep you posted and plugged-in.

38 thoughts on “Vacancy Rate Continues to Climb in San Francisco”
  1. Just anecdotally the inventory looks pretty weak in SF. Craigslist is flooded with junk that didn’t have any business commanding $5000/month in the first place: weird/non-existent heating systems, awkward bathrooms, bedrooms that were initially the dining room, along with the usual windows that can’t open or close, sloping floors, etc. IMHO there’s a lot more room for these worthless shacks to get closer to $0.

    Equally weak is the landlord advertising game in SF. I guess they got lazy, but now it seems to me that they really are going to need to post photos and give square footage if they want anyone to glance at their listings.

    1. Keep in mind that our trends data, which goes back to 2004, has excluded Craigslist postings (which tend to be too duplicative and onerous to verify) in favor of industry sourced listings since 2015.

      1. So it’s worth restating that the SocketSite trends data, by excluding pretty much all of the small apartment buildings in the city, is reflective of the market for large, professionally-managed buildings, many/most of the newer properties, often (but certainly not always) in areas less-established as residential neighborhoods (Soma, Mission Bay, etc.) which often lack the walkability and neighborhood services available in more established residential areas.

        My point is that there’s a difference in what is happening to rents and availability downtown or in Mission Bay or SoMa (where, I suspect, most of your data is derived) and what’s happening in Noe Valley, The Castro, or North Beach.

        I think the market is definitely softer across the board. But the 15-20% declines in asking rents that have been reported are not something I’m seeing in smaller buildings in lower density neighborhoods. A building with elevator(s) is a harder sell right now than something smaller scale.

        Anytime there is more inventory, the properties which will take the biggest hit are those which weren’t that desirable to begin with. Those properties with awkward layouts and outdated designs or features are going to be harder to rent when people have better options.

        1. That’s incorrect. The data we aggregate includes listings for “one-off rentals as well as units in larger developments,” as noted above. And of the active listings we’re currently tracking, less than 20 percent (i.e., the vast minority) are for rentals that are collectively “downtown or in Mission Bay or SoMa.”

        2. That’s because larger, professionally managed building are quicker to adjust to the market condition than “boutique” buildings, not because smaller buildings are more desirable. That was the case in 2010, and that is always the case. Mom and pop eventually catch up though when their units sit idle for a while and realize the severity of the downturn.

        3. I’m a property manager in SF dealing almost exclusively in apartments in small buildings and single family homes. The 15%-20% drop is absolutely real when you factor in the incentives (4 to 6 weeks of rent rebates). Single family homes are doing a little better.

          I also know someone that works at a very very large firm with many many buildings in SF and they agree with my observation is we have not seen the bottom yet.

    2. “Near popular bars, restaurants, coffee shops, and museums!”

      (that will probably not be open for another two years, if they don’t go permanently out of business)

        1. 1) I’ll believe it when I see it, given that this was also supposed to happen in late June / early July.

          2) It’s too late for many businesses – based on discussions with multiple small business owners in the Inner Richmond (and walking the sidewalks – when the air’s clear) many bars and stores have already passed the tipping point and are closed for good, or winding down operations.

          3) Based on newly released studies, I for one am not going to be frequenting indoor restaurants and gyms anytime soon – doing so seems to entail a 2x increase in covid risk versus people who do not do those indoor activities, after taking into account other factors.

  2. Well, the Mayor’s harsh lockdowns have significantly contributed. Who wants to be in a city that are dotted with ghost neighborhoods? Pelosi’s visit to a hair salon proved that total lockdowns weren’t and aren’t necessary.

    1. So “Bill the Avenger” is really “Bill the Expert in Communicable Diseases” in real life? I mean, I agree some of the policies are very irrational (why is an Amazon Fulfillment Center with hundreds of employees operating under Bezos’ known deep concern for his employees’ health and welfare allowed to open while a local hair salon with three masked employees and a miasma of disinfectant in the air forced to stay closed), but that is a pretty broad statement.

      If there had not been a serious lockdown, there would have been an even more serious infection rate and far more deaths. And it is not primarily the mayor that dictates lockdown policies but the Governor.

    2. The Mayor’s “harsh lockdowns” have made death rates due to Covid-19 significantly lower than other, larger cities in California, even when you control for population. No one “wants to be in a city that are dotted with ghost neighborhoods”, but no one wants to contract the Covid-19, either.

      Pelosi’s visit to a hair salon doesn’t “prove” anything except that she has poor judgement and you should probably vote against her in the next election if she keeps that kind of behavior up.

    3. Ghost businesses are a shame but not as bad as actual ghost people. Not sure how you can conclude that a single person’s action is proof that a large scale public policy is not necessary.

      As for businesses that fail, it seems unfair that the current business owners were left holding the bag and take the hit of bankruptcy. Government bailouts were the right response but still not strong enough to keep every business alive. A friend who owns a fitness studio is hanging by a thread even after trying about every creative approach to stay in business. If she goes bankrupt, someone else can buy into her improvements and equipment and pick up where Covid left off. I’m really having a hard time reconciling why the original owner who built the business from scratch loses and the next owner who buys a turnkey operation wins.

      1. Isn’t that the nature of many “deals”? When you buy a $4000 item for 40c on where do you think all the ‘savings’ come from?

      2. Ghost businesses are ghost people. They are intertwined. Unemployment, eviction etc lead to bad health outcomes leading to lower aggregate life expectancy. These effects on the young will dwarf COVID impact . Unfortunately the dismal science of economics is lost on the narrow dictatorial health officer cadre.

        1. Now THIS is a rational version of Bill’s argument. Even if some Trumpalos make it, this is my biggest complaint. Along with skepticism that “slowing the spread” will do much over the long term

          1. The goal was to keep rates low enough that people who needed to be hospitalized could be (since that could sometimes be the difference b/w living and not) The time we need to do this is obviously an issue, since we’ve (now) far exceeded restrictions in earlier epidemics (1918). That having been said, some countries seem to have been able to move on – somewhat – tho if that’s b/c of better testing/tracing or a stronger (initial) lockdown is up for debate.

          2. No, it’s not. I don’t know how to politely respond to such ignorance — ignorance, that, at this point, is, well, mental. Here’s a graphic to help the explain exponential growth of deaths due to SARS-CoV-2: “The scale of coronavirus deaths.”

            Virulent infectious outbreaks dwarf anything humans do to each other: economically, in war, in hatred. Nothing compares. We must have succeeded beyond our wildest imaginings in conquering contagion to have produced a population so completely, utterly incognizant and unprepared.

            Can anyone in their right mind argue that 2,000,000 deaths (60% of population infected, case fatality rate of 1%) would do less damage to “the economy” than “shutting it down”? If your answer is yes, you’ve a bit more to learn about public health and epidemics. Where medical systems were overrun, case fatality rates have been greater than 10%.

            Once community spread had begun, our last resort became the brakes of disease control: cordon sanitaire, quarantine, isolation, testing. We do these things until numbers fall low enough that testing can adequately — that is, time-effectively and thoroughly — chase contacts. And, we pray for a vaccine.

        2. Most people can see the difference between dying a year early and a 2% chance of dying suddenly. Economists aggregate the two for mathematical convenience – that’s not an argument for forcing workers to take stupid risks in the name of GDP.

  3. Enquiring minds want to know why you did not include “aggregate asking rent” amount as you have done for previous posts about SF rent levels this summer? August 3rd you posted that rent was $3700. August 10th rent was $3600. August 26th was $3550. Has your aggregate data leveled out since then or does the freefall continue?

  4. For all its folly, at least San Francisco didn’t turn the city into a riot zone.

    People realy believe in the virus – if you’re driving your car with a mask on, you don’t need a Joe Biden sticker – and once they come to their senses the rental market will come howling back.

    1. Do we have any estimates on how many people have moved out of San Francisco in the past six months? I’ve seen more moving vans moving people out of my neighborhood (Mission Dolores) in the past six months than I saw moving people in during the last six years.

      And Bill, what do you mean by “People really believe in the virus?” As written it implies you think all these people dying and going to the hospital are fraud.

      I often leave my mask on during my short drives between places I need to wear it. It is easier than taking it on and off several times in the short amount of time I tend to be out and about.

    2. “Riot Zone” – Are you referring to the 2 or 3 square blocks in Portland or Seattle surrounded by the rest of the city which has largely been unaffected by the protests?

  5. San Francisco will always be expensive but will this be its last boom-town, experience? For the past two decades San Francisco has ( depending on who you talk to ) enjoyed its second gold rush, but as this one fades, I can’t imagine it happening again.

    1. Well, cities like SF and NYC are still global cities that attract immigrants. It ain’t Detroit or a lot of those dying midwestern cities. So, I see that when the pandemic is over and there is a trusted vaccine, cities like SF and NYC will bounce back. They always have after a crisis and I see it happening again.

        1. From a Pew Research Center analysis of the U.S. Census Bureau’s American Community Survey dated Jan 30 of this year:

          Nearly 14% of the U.S. population was born in another country, numbering more than 44 million people in 2017, according to a Pew Research Center analysis of the U.S. Census Bureau’s American Community Survey. This was the highest share of foreign-born people in the United States since 1910, when immigrants accounted for 14.7% of the American population…

          The U.S. has more immigrants than any other country, although the the foreign-born share of its population is far from the highest in the world.

  6. The real question is “Will the bears take this foregoing opportunity to buy?” Doubt it for some reason.

    1. Is this an opportunity to buy? Seems more like a bear trap that is going to burn the equity of people hoping for a quick recovery. The real opportunity is going to be 5-9 years from now when things bottom out.

    2. In the stock market, bears can enter and leave a position as soon as new data convinces them to abandon their thesis. You can’t always do that in RE. It’s the canonical example of an illiquid asset.

      So if you’re long-term bearish on San Francisco RE, you obviously won’t buy. If you’re short-term bearish, you won’t buy unless you can take the risk not to sell on the next up cycle.

  7. From Rents Sink Toward Reset Moment in Cities With Smoke-Filled Skies:

    As much as the plunge in demand is hurting urban landlords, a reduction in rents could be a good thing for New York, San Francisco, and Seattle in the long run, says Richard Florida, an urban theorist on the faculty at University of Toronto’s Rotman School of Management. “What we need is cheaper housing,” he adds. “This offers us an opportunity to reset.”

    College graduates will stream into these places again when virus-related restrictions are lifted, because they’ll want the freedom and opportunities that cities afford, Florida argues. Artists and creative types may be able to regain a foothold after being priced out.

    There isn’t going to be a quick recovery, but maybe that will be a good thing overall.

    1. That’s what my SF friends say, “Artists and creative types may be able to regain a foothold after being priced out.” Well, this NYC arteest is packed and ready to go! – by this fall/winter 🙂 Take care! <3

  8. I think it is great that rents are falling drastically in SF. Landlords have been taking advantage of renters in this city for years and now they’re getting it. Glad to see the market tanking and finally going in the other direction.

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