CFAH

Having ticked up to over 10 percent in November, the average vacancy rate for a sampling of ten large apartment buildings in San Francisco, representing a combined 3,600 units of housing located in Hayes Valley, Dogpatch, Mid-Market and Downtown, has ticked down to a little under 8 percent, driven by aggressive discounting and incentives to sign a new lease by the end of the year.

That being said, the vacancy rate for one of the larger buildings is still over 20 percent and another building, which was fully occupied prior to the pandemic, has had over 100 vacant units since the end of October.

And at the same time, the weighted average asking rent for an apartment in San Francisco ended the year at $3,100 a month, representing a 24 percent drop in the average asking rent over the past year and a 31 percent drop from a 2015-era peak of closer to $4,500 a month, with three times as many apartments now listed for rent in San Francisco than there were at the same time last year.

Comments from Plugged-In Readers

  1. Posted by [JJBiddyBean]

    The bottom is in.

    Expect a rabid frenzy next Spring as everyone on the sidelines decides now is the time to buy given the low rates and inevitable upturn after vaccinations. FED won’t be raising until 2024-2026 regardless of inflation data.

    This doesn’t even mention the massive, MASSIVE!!! stock RSU wealth that accumulated over 2020. Uber, TSLA, FB, GOOG, TWLO… soooo much liquid RSU cash chasing next to no properties in 2021

    • Posted by Cave Dweller

      How do you know this is the bottom?

    • Posted by Michael

      All bets are off until the eviction moratoriums and mortgage forbearance programs expire.

      • Posted by ST

        For 6-9 months after the moratorium expires, no tenant is going to face eviction because court is backlogged.

        One friend has a lawsuit over a business dispute w a partner, took 7 weeks (and counting) just to get the lawsuit filed at court.

        • Posted by KOBking

          You can file a lawsuit electronically anytime you want so that cannot be true.

          • Posted by ST

            Court in SF now requires in person filing at the moment, and once the complaint is in the hand of the court clerk, he/she needs to upload into the court system, at which point the plaintiff can download it and serve the other party. It is at that point that the lawsuit is considered filed.

            And the court clerk has been sitting on the complaint for the past 6-7 weeks now…

          • Posted by KOBking

            That’s incorrect. Electronic filing is mandatory in SF superior.

          • Posted by Brisket

            You SUBMIT it electronically for filing, but the Clerk still has to approve and enter it before it is accepted. Sometimes things are accepted within the hour of submission and sometimes several weeks later, depending on the clerk luck of the draw. Once accepted the date of submission is the controlling date.

          • Posted by KOBking

            @Brisket So you agree with me that “in person filing” is not required then. Thanks.

          • Posted by Brisket

            @KOBking – Yes, you can file a new complaint electronically, but the process is a little wonky since you need to get an original issued Summons back in order to serve the Complaint, so SF requires you to drop off a self addressed stamped envelope or get a courier to get the summons once filed. You can also fax and file if you want to avoid going to the court house.

          • Posted by KOBking

            So if I timely file my complaint electronically I could be barred by the statute of limitations based on inefficiencies at the clerk office? Doubt it.

          • Posted by Brisket

            “So if I timely file my complaint electronically I could be barred by the statute of limitations based on inefficiencies at the clerk office? Doubt it.”

            No – as I stated above, the date you SUBMIT it is the controlling date for that very reason. So if you submit it for filing on January 1st but the clerk doesn’t get around to processing it until January 30th, the filing date will still be January 1. It just delays the whole action because you can’t serve it on January 1 because you won’t have a case number and/or summons until January 30th.

    • Posted by Ken m

      That stock wealth is purchasing palatial Tahoe estates, not overpriced midmarket skyboxes. [And you think] all the employees at those places get the stock largesse?

    • Posted by thattechguy

      absolutely correct, the bottom is in and it’s a HUGE ipo year.

    • Posted by KOBking

      The question is whether people will continue to mindlessly buy in SF or will seek a home elsewhere.

    • Posted by anon

      It’s almost as if you are in sales. “Rabid frenzy… next to no properties” Maybe Nellie Bowles can interview you for her next article.

  2. Posted by ST

    I cant quite tell whether you are being sarcastic or not, LOL…

    While I agree that vacancy rate bottom is likely in, the property price bottom is NOT in yet, IMO. Vacancy rate will stay at elevated level for a while and some investors will inevitably choose to throw the towel in.

    • Posted by sfgjf

      I agree. Unless constant appreciation can be for certain, prices with such low cap rates won’t work. Multi family buildings will not appreciate with declining rents and high vacancy rates. Subsidizing a property is a loosing proposition.

  3. Posted by ExAgent

    Friend of a friend negotiated 6 months free rent in one of the new buildings.

  4. Posted by JW

    Doubt this is the bottom. I just got an 850sqft 1br at NEMA for $2300/mo with discounted parking from $400/mo to $200/mo. No “free months” included. True rate.

    • Posted by Wai Yip Tung

      Awesome rate! How much down from the peak?

      • Posted by SocketSite

        While we don’t have the peak rate for the exact unit, keep in mind that when NEMA opened in 2013, the cheapest one-bedroom, a 789-square-foot unit on the second floor, was priced at $2,683 per month.

        And as we first reported near the end of last year, the average asking rent for a one-bedroom apartment in the city has slipped under $2,700 a month for the first time since 2012 and is down around 28 percent from peak and around 4 percent below 2013.

        • Posted by grumpy

          I moved out of NEMA in May 2018 after living there since it opened. i was paying close to $5,600 for a 879 sf 1 br on a high floor including parking and storage locker when I left and rent started at $4,700.

          • Posted by ST

            I have been renting a 3/2 single family home in Sunnyvale for the last 6 years for $3300 a month. My landlord never raised my rent even when we don’t have rent control. The house is in a $1.9m ~2.4m neighborhood. SF rent is crazy.

      • Posted by Freeloader

        A friend was looking at NEMA at the end of 2018, and couldn’t afford it. She ended up paying $3400 [elsewhere]. I think NEMA was close to $4K for a 1 bedroom.

    • Posted by KOBking

      I recently rented a beautiful two bedroom in Glen Park with parking for two cars for 4K. It’s rent controlled. Not sure if that’s a “great” deal but we love the place and it’s on the cheap side for us.

      • Posted by KOBking

        Also, one month free.

      • Posted by jimbo

        our friends just rented a 3br 2 bath with parking on lake and 12th for $3100. unbelievable

  5. Posted by Wai Yip Tung

    Is there a long term tracking on these metrics? I’m very interested to see the impact compare to the historical trend.

  6. Posted by Bill

    Curious as to why tenants are excited about locking in a cheap rate at non rent controlled building ie NEMA for example. If and when the rents increase the landlord can raise your rent to market correct? Everyone has their own taste but if you think you will rent for a few years seems to make more sense to lock into an older building?

    • Posted by haighter

      Doesn’t matter if you expect rents to stay flat over the next couple years (which I imagine is the length of a typical tenancy at a building like NEMA). Also some people value modern floorplans and having a dishwasher

    • Posted by JW

      I plan on buying a condo when my lease is up at NEMA this fall..so I was fine with one year non-rent controlled.

  7. Posted by Mao Zedong

    “Free Rent Drops Vacancy Rates”

    This headline accidentally stumbled onto the solution to the homeless crisis everyone on this board loves to complain about. Turns out the profit-motive is at odds with housing. Heh…..funny that.

    • Posted by Brahma (incensed renter)

      The people in these comment threads that love to complain about the homeless crisis blame The City, not the aggregated actions of private sector market participants that drive up the cost of housing, so they are never nudged toward thinking about whether the profit-motive is at odds with actually housing those in need of housing.

      We could probably convince some of them if we managed to separate the homeless who were in their situation due to economic circumstances from those who are homeless due to addiction, so that the complainers on this site would potentially stop writing off all those living on the streets as heroin/fentanyl addicts. That would be an interesting public policy innovation to try out here.

  8. Posted by CuriousRenter

    I am debating signing a two year lease. Does anybody think the market will continue to see average rent prices drop across the city?

    • Posted by DK

      Yes, 1 year terms from March still not reached plus eviction moratorium in place. Additionally, I would imagine landlords that can’t cover their mortgage will lose/sell off some properties which get bought up at a discount and rented at a lower price. My 2 cents.

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