More Apartments on the Market in San Francisco and OaklandDecember 10, 2020
Despite the fact that the average asking rent for an apartment in San Francisco has dropped 24 percent since the end of February and the average asking rent for a one-bedroom is back under $2,700 a month for the first time since 2012, listing activity for available units continues to tick up.
In fact, there are now over three (3) times as many apartments listed for rent in San Francisco than there were at the same time last year with vacancy rates on the rise.
And with listing activity for apartments in Oakland having doubled over the past nine months, the average asking rent in the city has dropped 13 percent and is currently down around 18 percent versus the same time last year with the average asking rent for a one-bedroom in Oakland having dropped back under $2,000 a month.
Keep in mind that listing activity and availability typically drops at the end of the year.
Comments from Plugged-In Readers
Still zero vacancy for me… I had hope some my tenants would move out. My rents must be way too cheap.
yeah, better jack up the rent during a pandemic. it’s what jesus would do
Raising the rent during a pandemic during which many (most?) San Francisco renters have lost zero income and whose stock portfolios are way up? Yeah, how horribly inhumane. (Not that the market would bear it, so it’s a moot point.)
I guess it was poor taste of a “joke” so I apologize.
My tenants and I have a pretty good relationship. I don’t want them to leave because they can’t afford it or are evicted. I was hoping they can upgrade to better places since there are more bargains! I’ve never tried to push anyone out to make more money. I always try to work with my tenants even if they are months late. So far, everything has worked out well. I personally think the rents I was seeing for the past 3-4 years are absolutely insanity…
Sometimes I think I’m too soft to run a rental business… Anyways I get it no sympathies for us landlords. No problem. I get it.
3 homes near me were rented out to unrelated adults. 10 people in all – essentially renting out bedrooms. 14 cars between them. Absentee owners. A bad situation for the neighborhood. Good news – 8 of those 10 people moved out since the pandemic and the owners have so far not been able to rent out the empty bedrooms. Empty parking spots can be found when before they couldn’t.
As to the inability to rent the rooms there are two scenarios. Half the people who left got out of Dodge completely. The other half moved into apartments – presumably at a “bargain” rent. So fewer potential tenants and of the remaining pool of tenants some (many?) are now able to move up from renting a room in a house to renting an apartment.
Why did my post about Seattle media spinning the same story get deleted? I posted it because I had assumed Dave was speaking of Seattle.
Based on prior comments and elucidations, we believe your assumption was incorrect. Which brings us back to the market in San Francisco (and Oakland).
From the day before yesterday, San Francisco’s 35% Plunge in Rents Shows Effects of Tech Fleeing City The rise of remote work in the wake of the Covid-19 pandemic is remaking one of America’s priciest places to live.:
Go read the whole thing. The folks on here shouting that major tech companies [are] all going back to work July 1 in the office may know what they are talking about, but that doesn’t mean there won’t be fewer occupied/leased offices to return to. And there are other employers besides “major tech companies” (whatever that means).
Realtor.com, and by extension Bloomberg, would appear to be a month or two behind the times/trend. And while the decline in rents had accelerated from April through September, the rate of decline has actually since slowed (versus steepened).
And the actual office-vacancy rate in San Francisco is 75 percent higher than what Bloomberg reports.
The data – i.e. graph – in the story is actually thru November, and yes it confirms what you claim: the bottoming out of a parabolic curve – or perhaps an inflection point (for those recognize that lines can move in complex ways.)
A bottom is still a bottom, tho, so while it’s wrong to say “declines are steepening” it’s true to say “the decline is much more than it was earlier.”; and, dare I say more importantly, there’s no certainty when – or even if – that will reverse.
It’s actually just spreading the misery to other places in California that were relatively affordable. San Diego, Sacramento, and Tahoe are seeing rapid increases in housing costs since the pandemic started. A lot of Bay Area expats are driving out people in these areas.
No. July 2021 was a pipe dream cooked up by desperate property managers. It’s never coming back.
Oracle, the grand dame, is now perm WFH and is moving corporate to tax-free Texas.
This is the norm now. Not an aberration. Not even a trend.
My guess is things will bottom out around January/February. Lockdowns, winter/rain, ongoing COVID.
By March, there will be serious rollouts of vaccines underway. All year long leases signed in March 2020 will be up (anyone who could have left, will have). Things will start looking up. Non-tech companies (law/finance etc) may start having people back in the office. People might “front-run” and try to lock in low prices.
I’m not sure I’d include rain in “bottoming out”: in addition to our other travails we’re fast falling into a drought. Of course most of Bay Area is dependent on snowmelt, so the loss doesn’t mean much…yet.
I think the bottom will be way past a few months from now. My wife works for one of the largest investment companies in the world and they are not bringing employees back to the office until the beginning of 2022 at the earliest…it could even be 2023.
Healthy 20-somethings (the largest cohort of the tech workforce in the bay area) are going to be among the last in the world to get the vaccine.
March is optimistic for a “serious” rollout but it would be nice if that is correct. I guess it depends how you define “serious.”
On my block in the Marina alone, there are two larger buildings and they only list for one unit despite having multiple listings available. The one on the corner seems to be half empty and recently has taken down the sign. I guess landlords are making that bet between trying to fill all of those units at low rent-controlled levels vs leaving them empty, not listing and waiting for people to come back to the area.
that a very optimistic timelines. regular joes under 65 without health issues likely wont be eligible until april (earliest) with 2nd dose in May (more likely June/July). i doubt rents are rising in March, but could rebound by mid to late summer. the true question is how many people are coming back? its anyones guess
I highly doubt that any company will begin to have people back in the office by March. Maybe and that’s a strong maybe, they will offer an option for a small decreased number of employees to return in March (if they choose) but I highly doubt any company will be requiring or making it mandatory for employees to return to the office until at least August. Sure there are businesses stating they will open offices in June/July/Aug 2021 but that most likely will be a moving target. Vaccine or no Vaccine
And now Oracle. Moving headquarters to Austin TX and adopting a “more flexible employee work location policy”: “Many of our employees can choose their office location as well as continue to work from home part time or all of the time,” the company said. ”We will continue to support major hubs for Oracle around the world, including those in the United States such as Redwood City, Austin, Santa Monica, Seattle, Denver, Orlando and Burlington, among others, and we expect to add other locations over time.”
Many people are in a great deal of denial about what’s going on. But the news keeps coming.
They’re in denial because they have vested interests in how things used to be.
Had to laugh at the one chap saying productivity is down. It’s not.
Joe Biden lost Texas by only 4 percent and won California by over 30 percent. Beto O’Rourke lost the senate race by about 2 percent. More techies moving from California to Texas makes the state competitive in presidential and senate elections now.
The Oracle announcement is huge and is a red flag warning that the exodus of companies and people from SF and the Bay Area is an ongoing trend that will not be reversed in 6 months or so when things “get back to normal” About 14% of Redwood City’s workforce works for Oracle. Look for a heavy impact on RC in particular – it will now be just one of Oracle’s regional hubs.
Yahoo News this week did a story on how SF is putting one more nail in its coffin as a business/tech center with the recently passed Prop F. Companies will simply move their headquarters or regional offices from SF rather than pay that tax should they be subject to it. The cost of doing business in SF just keeps on going up. The father of FinTech relocated out of SF to Denver recently. The cost of doing business in the City made it cost ineffective to remain here. A long time resident who loves the City but at some point that love comes with too high a price tag.
SF is likely to see a larger wave of corporate departures than it has so far experienced. Twitter, Uber are two likely candidates. The City PTB seem clueless as to what is happening. Not a surprise as they are mostly a clueless, corrupt bunch.
Young techies are dying to go back to life that has community. WFH offers none of this. College grads headed into tech cities did not dream about landing the perfect job working from home in the burbs. They want to go where the action is.
‘Experiences’ are the name of the game. Having meals provided… flowing kombucha and coffee from the company’s cafeteria… happy hour with buddies… outdoor activities… hanging with coworkers and friends on the weekend… traveling. We can’t expect the young gen to expect any more than this. Afterall, who would want to take their college courses online when students are allowed back on campus.
When we truly snap out of it… we will finally figure out that baking sourdough bread was just a weak substitute for the experience in a big tech city (and now just looking obviously like an attempt to fill the void of the lost community). I mean really? Did we really think that working out by ourselves at home is the best thing in the world? People like to people watch. When I go to a hotel gym and I am the only one in there… it just seems like a sad place to be no matter how nice the hotel.
Anyways, WFH comfort will typically come from those that have good roommates or live with partners… otherwise who would want to live on their own, roll out of bed to work, and then roll back into bed? Or maybe roll out of bed on the weekend and hang out in a bit yard? Maybe in Austin cuz people are headed there? I don’t want to sound like a douche canoe but it’s too friggin hot to live their half the year.
When it is safe… and there will come a time when everyone will have access to the vaccine. People will opt for hybrid model. Those 2 or 3 days people will have to commute will be painful when we see everyone commuting those 2-3 days again… and people will wonder why they are away from the action… the flowing kombucha or whatever.
I agree with you – but offices will be smaller and regional. You are already seeing several companies move their HQs outside of CA.
SF will continue to have tech, but that community will be smaller. There are serious issues with SF – outside the pandemic. High cost of living, taxes, out of control homeless issue, incompetent government, crumbling infrastructure (i.e. Muni closures well into 2021). The pandemic have worsened these issues and companies realize they can combine some permanent WFH, smaller offices throughout the country. Instead of having one large office – having several around the US would help attract broader talent.
SF will not go back to 2019 – imo. It will improve and change, but it will and should never be the same.
Not only will the tech community be smaller, the major corporates business community will too. Last year saw Blue Shield decamp to Oakland taking about 1300 employees. PG&E recently announced its move to Oakland with about as many employees. The potential job loss could be staggering when you add in Stripe, Drop Box and others like Uber and Twitter. Preposition F will likely end up driving large numbers of jobs out of SF. A company may want to stay in the Bay Area but SF has become too expensive and too regulation heavy. Look for an exodus of SF companies to other Bay Area locales.
Uhmmm…Credit Karma will exit San Francisco and shift HQ to downtown Oakland
Yup. Companies can’t afford the cost of doing business in SF. And non-tech companies especially. Major companies are moving their headquarters to Oakland while SF is not seeing any companies choosing to move to the City. How many thousands of jobs have left already between Stripe, PG&E, DropBox, Credit Karma and Blue Shield. This IMO is just the first wave. Look for Twitter, Uber, UCSF administrative offices and more to bail in the coming year. SF faces an uncertain future as companies abandon it for other Bay Area cities and for out-of-state cities. It is unforgivable that the SF PTB are ignoring a potential massive loss of jobs and the economic consequences of such. Meanwhile per Oakland’s mayor that city is actively working to get companies to move there.
American recent college grads will be happy to relocate to Austin, and they can get the same sense of community and big city vibe there that they can here. You sound like someone who’s never been there. There are any number of tech firms (including Oracle, for example) that already have a large presence in that city.
Those firms do provide meals, and free-flowing kombucha and coffee from the company’s cafeteria. Yes, there are Friday-night happy hours with buddies and outdoor activities. All that and with much fewer homeless and dramatically fewer hardcore, drug-abusing-and-dependent mentally ill on the street.
The point you seem to be missing is that in Austin the cost of living is dramatically lower, because the cost of housing is much lower. Tech firms can therefore pay their employees less money. This is due to the availability of land and the lower prevalence of people moving there from elsewhere, including outside of the U.S., to exploit highly-paid tech workers who for whatever reason (high home prices) lack the wherewithal to purchase their homes. ‘Experiences’ are the name of the game, but the most important one for one’s well-being is not giving up close to half of one’s salary to a member of the global landlord class.
The flippers, penny ante landlords, real estate agents and other hangers on in the real estate “game” won’t admit this, and post red herrings about “serious issues with SF”, because they don’t want to come to the conclusion that they killed the goose that laid the golden egg.
Austin is a totally different vibe man. Totally different. It is not at all like SF. Other than a couple pockets in the West, Seattle, Portland, LA, SD there is no dense urban feel on the West Coast. Austin is not that. I love Austin, me, and if my wife liked humid weather we’d already be there or at least considering. But, no. It’s a spread out Texas city and that’s what it is.
“[…]they don’t want to come to the conclusion that they killed the goose that laid the golden egg.”
To be fair, they’re just operating in their own best, personal, short-term interest, as ordered by the sociopathic game of financialized, late-stage capitalism (viz “dodo,” “Irish elk,” et al).
As always, Sinclair’s aphorism applies.
“The flippers, penny ante landlords, real estate agents and other hangers on in the real estate “game” won’t admit this, and post red herrings about “serious issues with SF”, because they don’t want to come to the conclusion that they killed the goose that laid the golden egg.”
I think my favorite red-herring oft trotted out to detract from the internal contradictions prevalent in any capitalist society from the rent-seeking landlord class on these boards is the incessant complaining about homelessness as the factor driving away potential renters, rather than meaningfully analyze the relationship between high homelessness and the high rents demanded by members of that very same rent-seeking group. But whatever, landlords gonna landlord.
And of course those same critiques will also complain about the burden of regulation on businesses as a driver of industry moving to “business-friendly, regulation-free” places like Texas in search of lower taxes and a cheaper labor pool, all the while denying the antagonist relationship that must exist between labor vs capital in an effort to heap praise toward our generous, benevolent job-creators.
Lot’s a tech heading to Texas. Can you imagine? How horrible. SF will always be expensive because it’s a wonderful city, but there had to be some adjustment to the rent insanity. It’s just not sustainable. The truth is, it isn’t sexy to work for tech anymore. The association with politics ( and you know who ) has knocked the bloom off the rose.
Please everybody knows the money is in tech- be it biotech, fintech, comm tech, app dev., game tech…and these skills are in demand and you can work from anywhere once you acquire these skills – so valuable-Not sexy – only for trust fund kids. Lots of kids want to make $100K out of school. SF will come back once this passes and it will even be more fun because it will be less expensive and less crowded and new places will open. SF city government will have a lot to deal with as their expenses went up, their tax base down and it is a very poorly run city.
i would remove biotech from that list. unless you are in sales or marketing, hard to be remote. and most marketers want to stay close to HQ for career reasons. its not like tech.
Im hiring people and mandating they be local. For small to medium companies, most other people are too. I spend a lot of time speaking with recruiters about this. we will mandate 3 days/wk in the office likely starting in July. there are people in SoCal willing to so 3 days a week here, but most of the talent is already bay area or boston based. boston candidates are too far
Cities have survived barbarians, fires, plagues and even a nuclear bomb. This moment is fleeting.
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