As we outlined last month, while the weighted average asking rent for an apartment in San Francisco was holding at around $3,100 a month, listing activity was actually inching up. And as we wrote at the time: “In other words, the current plateau in asking prices might represent more of a psychological barrier or hope than a true market floor and/or clearing price.”

Since then, listing activity, which is currently running around 160 percent higher than at the same time last year, has continued to inch up and the average asking rent for an apartment in San Francisco has slipped back under $3,100 a month, with the average asking rent for a one-bedroom approaching $2,600 a month for the first time since 2012 and the average asking rent for a studio, which is now down nearly 35 percent from a 2015-era peak, having slipped under $1,900 a month for the first time since 2010.

Our latest trends analysis is based on pricing data from over 11,000 past and active listings, which is a subset of the data from over 100,000 listings going back to 2004 that we maintain, normalize, and index on a monthly basis.  We’ll keep you posted and plugged-in.

51 thoughts on “Rents Continue To Drop in S.F., Studios Hit an 11-Year Low”
  1. In 2008 I rented a studio apartment on Twin Peaks with an amazing view of the Bay for $1300/month. So $1900 is still very high compared to those times.

    1. $1,300 in 2008 equates to $1,604.21 today, so I’m not sure I’d call $1,900 very high compared to those times, especially when there’s an eviction moratorium masking the true supply of rentals.

  2. Fake news. Given the number of vacancies rents should have fallen 100% if landlords put them all in the market. But they collude by withholding most of them, thus preventing a collapse.

    1. Where do you go for “real” news? Just curious. $1,900 for a studio, while not cheap, is not terrible in one of the most expensive place to rent in the USA. Maybe it will continue to trend lower over time but going back 2010 prices is not insignificant. What is your definition of collapse?

      1. It will no longer be most expensive for too long. If supply far exceeds demand the price must get to near zero – that’s the only true floor. SF is in that situation. People don’t want to live here at any cost. Wait for few years and rents will be keep falling.

        1. Prices would never get that low – as demand and price drops, LLs will progressively take their property off the market until some price floor is hit (their decision being influenced by cost of time, expenses they have to cover, etc).

          1. A way around this would be to let landlords treat rents under rent control the same way the state treats property tax valuation. Prop 13 limits the assessed value as a function of the purchase price. However, if the market value drops, owners get the lower valuation. Then, if market values go back up, the state can increase the assessed value quickly back up to what that same value would have been under the Prop 13 inflation limit.

            Landlords are reluctant to lower rents in rent-controlled buildings because tenancy confers a life estate to the tenant at a price plus inflation. If landlords could:

            1. Demonstrate what the previous rent-controlled rent was prior to a market downturn.
            2. Be allowed to rent at a new lower market rate.
            3. Then be allowed to raise the rent back up to what it would have been the pre-downturn rates.

            Rent control creates many of these perverse incentives in the housing market.

            If your rents are low enough, it makes sense to take your building off the market (Ellis) for 5 years and then return to the market.

          2. @soccermom – What if prop 13 were limited to primary residence? That could improve housing stock availability quite a bit and help make housing relatively affordable.

        2. Post-pandemic will see people return to cities, and demand increase. The notion that people leaving urban areas is an SF only dynamic is specious. So I don’t see why waiting a few years would yield falling rents.

          1. The notion that the coding industry can only flourish in San Francisco – the most expensive city in the western hemisphere – is specious. If on-demand, scalable, disruptive pizza delivery apps ever want to reach profitability, it would make sense to cut the rent, overhead, and salaries that running a business in SF incurs. Plus, young symbol manipulators could actually afford their own places in any other city, and not have to live in covid co-living SRO dorm cubicles for co-ed coders.

          2. I don’t understand why you followed my point up using mocking verbatim language yet inserting another point, the coding industry. I did not say it’s coders who’ve left or who would potentially return. Regardless I’ll again refer to the myriad takes from people in tech on here and elsewhere who have spoken of what offices will likely be post-pandemic. The thing is, what’s not been done is what you describe. You say something would make sense. OK sure. In some ways that makes perfect fiscal sense, agreed. But does it make sense for hypothetical company X, Y, Z ? unknowns. And again, many tech employees posting here and elsewhere doubt it.

          3. And I mean, again, this is not a SF only thing, leaving urbanity during covid days.

          4. People seem to think that tech is the only industry in SF. Others will benefit by the drop in housing prices. UCSF has had trouble recruiting doctors and researchers because of Bay Area housing costs – same for biotech. They’re glad to see prices drop somewhat.

          5. Also, Two Beers never stops talking about pizza delivery apps. Maybe it’s best if he doesn’t know about Salesforce and Twilio.

          6. @Mutal Kudi — there are plenty of doctors, nurses and scientists available for hire. But given the cost of debt and housing, can’t say the current salary scale is an exciting deal for anyone considering joining UCSF. That is exactly the problem. Bulk of the people in bio/nano/sw/neuro – tech do not/can not/will not make the kind of money required to afford the current SF housing prices.

            Fresh grads can slum it out for a while with shared rentals at inflated prices. But as soon as they start considering relationship and family, slumming is not an option.

            They either couple up with other like income making partner while maintain very low rent costs or jump town.
            Think about it from the point of earning potential in SF vs elsewhere.

            SF offers (or thus far offered) a great prospect in terms of wealth accumulation by way of housing. But now it has gotten so expensive that it is not easy or even impossible (at $1M+ to start) to get in on it. The pandemic has simply exposed this weakness.

            Like I keep saying the only way to support housing prices in SF is to build more (and also address crime, schools & infrastructure).

    2. Your observation aligns with my personal experience here on Nob Hill.

      My 43-unit apartment building now has 17 vacancies and counting. That’s about a 40% vacancy rate. Yet my landlord’s website has only posted 2 (still) empty apartments for rent FOR THE LAST 11 MONTHS!

      Before the “Tech Titans” entered the bidding wars for City Hall favoritism, it has ALWAYS been the commercial and residential landlord cabals that have bought and sold (through across the board “campaign contributions” – a/k/a outright bribery) undue influence in The City’s truly most crooked street, that Van Ness Avenue block in front of City Hall.

      And why does our San Francisco Mayor, in a city of 1/10th the population, make $100,000 more each year than the mayor of New York City? THAT is how you induce a child of The City’s subsidized housing to wholeheartedly oppose both affordable housing AND Proposition C’s homeless tax on the ONLY THE VERY WEALTHIEST 5,000 CORPORATIONS IN CORPORATION FILTHY SAN FRANCISCO!

      And let’s not forget, even though I have long despised this monstrosity now known as President #45, it took the FBI to come into this corrupt little backwater town to reveal that Mayor Lee, Mohamed Nuru, DBI’s Tom Hui, (SFPUC’s Chief) Harlan Kelly and only God knows who’s next have FOR DECADES been receiving lavish bribes while The City’s sidewalks were smeared with human feces and littered with discarded IV needles.

      1. Speaking as a landlord (outside of California, mostly) myself, there is rarely any good reason to show more than one unit of each size as available on a web site. If you tell every prospect that you have 17 vacancies, they will think there’s something wrong with the building or they’ll get the idea that you’re desperate to rent them (you might be, but that’s not something you want prospective tenants to know.)

        When I have multiple vacancies, I only list one in each available size. If I rent that one, I then list a different one. If someone comes to look and likes the property but doesn’t like the unit I’ve shown them, I can say, “oh, there’s another unit that is just about ready to rent” and I can show them a different one.

        No landlord is intentionally keeping units off the market to try to boost rents. That would be insane. Anyway who thinks that doesn’t understand the business at all.

        1. “No landlord is intentionally keeping units off the market to try to boost rents.”

          I agree with that, but regardless of intent it does seem that units being kept off the market means that actual supply (and vacancy rates) are probably larger then you’d expect purely from looking at listed units. Lots of pent up supply out there.

        2. IOW, supply & demand works great in Econ 1 texts where there are no provisions for multiple variables, externalities, asymmetric information, and market manipulation, but in the real world, not so much.

          Even if your intent is not distort “supply,” that is its effect.

    3. There are some very good reasons besides collusion to keep apartments vacant. Renting now means risking a non-rent-paying tenant who can’t be evicted. Renting in a falling market is lose/lose: if the market continues down, you’ll lose your tenant; if the market goes up, you’ll be constrained by rent control from following the market. Uncertainty rules, at least until March.

          1. Prices have not dropped anywhere near as much as they would have if all supply were put on the market.

            Economics does have a term for a group of market actors who suppress supply in order to interfere with how supply & demand should function, ceteris paribus.

            That word is “cartel.”

          2. Those words and the mom and pop landlords who make up many of the rent controlled stock in this town have little to do with one another. That bloc, acting in concert? or even communicating with one another writ large? no.

          3. I don’t know how much prices “should” have dropped. Are there any statistics on this?

            The fact is that as demand has dropped and supply has been constant, prices have dropped.

          4. OC: Cartels can be unofficial, informal, and tacit, and all market actors do not need to be participating in the cartel for it to exist. “Cartel” can just describe the market behavior of some participants.

            The thousands of unlisted but obviously-vacant unit one sees throughout much of the city (in even non-rent controlled units, mind you) shows that market participants are acting to constrain supply.

            SFR: If prices have gone down because demand has plunged and, as you claim, “supply has been constant,” then more supply (of a given market segment) should also force prices down further (of that given market segment).

            The RE crowd always says we need more buildings to keep prices down, but now, in a historic glut of empty units, by denying that glut, the supply variable suddenly doesn’t factor into pricing, it’s merely that demand has plunged!

            You’re both denying there is a glut, and you’re arguing supply doesn’t factor into S&D. The logic of the pitch changes as market conditions shift.

            This shows another flaw in S&D as explained in Econ 1: supply acts differently in a bubble than it does in a crash. In a bubble (created, say, but cheap money), assets become fuel for the speculation. Remove one asset, and another will take its place, until the bubble pops.

            In a crash, OTOH, supply does work as the simplistic diagram in your Econ 1 text shows, and it puts downward pressure on prices. Which is why supply is now being kept off the market and why people like you deny that it even exists. I’ll give you the benefit of the doubt and assume you are not being disingenuous, but just unintentionally demonstrating the validity of Upton Sinclair’s notable epigram.

          5. I’m claiming that supply has been constant because supply has been constant. In the last year, has the number of living places in San Francisco changed in any appreciable way? No. Supply is constant.

            I’m arguing the exact opposite of “supply doesn’t factor into S&D”. Supply and demand together (not individually) determine the price. That’s what’s happened here.

          6. Sure, let’s ignore all the new buildings coming online at the hub and elsewhere.

            Supply that is being used or is available to be used is not the same as supply including units withheld from market.

            Price discovery for the former is either different from the latter, or S&D is rendered meaningless.

            I’m curious what city you are referring to in which “supply has been constant,” because it sure ain’t SF.

          7. How many new housing units have come online in San Francisco in the last one year? Do we have a number?

          8. It’s perfectly rational for landlords to keep units off market in the short term if the market rent paid is less than the value of the life estate that tenancy in San Francisco confers. No collusion, just a rational response to rent control rules.

          9. So, then you are saying that the thousands of empty and unlisted units that are not under rent control are, in fact, collusion!

            A bold statement, but not one without merit, I’ll grant you that.

  3. So we are bailing out landlords so they can keep properties off the market?!?
    And in effect the prices are not able to be market rate?!?

    Rent control and vacancy control in reverse!

  4. Best deal in town for landlords is to rent to the homeless through the city. I read that the Biden administration is going to pay landlords $285 a night for a room. Uhmm that’s $8550 per month for a single room.

    So who says rents are slipping?

  5. The reality is this, the cool factor of working for a start up or in tech, is over. Covid or not, working at Facebook isn’t something to brag about. What’s cool is using tech to become influential, making tons of money and buying a huge house in Colorado, etc., where it’s clean, safe and reasonable to buy a big house.

    Being an intellectual snob isn’t sexy anymore. I predict Twitter and other large companies who have a workforce of non-SF natives will exit the city, soon. San Francisco has been a lure for talent, but I think SF has lost its cool as far as for trend driven young people who are always considering their image and what’s next.

    This is the bubble bursting, it’s been due for some time. Rents will always be high in SF but I don’t think they will ever reach the highs of the past five years, there’s nothing to sustain it.

  6. To think people will return to the city, once it is safe to do so, may be a bit naive. It took years for the city to recover from Loma Prieta. Apartments and businesses vacancies everywhere and rents were significantly lower than they had been before. People who fled rarely returned and it was difficult to attract newcomers to a lifeless city. Things seem worse now than they were back then.

  7. @Cave Dweller: Before you go down the road of “build more housing to keep housing prices low” you need to actually look at the cost of building in SF. Last I looked San Francisco was the “most expensive” city in the “world” to build in. So expecting to see “affordable” rental apartments from new construction is a pipe dream. And with the threat of more “rent control” on newer construction most likely DOA.

  8. @ExSFLandLord — Point taken. Also agree that SF cannot build to infinity because of geographical / infrastructure limitations. But SF can work with adjoining counties. San Mateo/Alameda/Contra Costa Counties are doing their part but more needs to be done.

    Or perhaps work with the state govt to distribute development to other parts of California — which may be a better way to go rather than lose opportunity to other states.

    If the WFH model proves out (and I think it is), then perhaps pre-emptively invest in developing school districts across the state. I think this can help quite a bit. I’ll also admit there are no easy solutions. But persisting with the status-quo I think it only going to make it worse for everyone – in SF and California.

  9. Just got around to watching the Fed Charmian’s speech/QA that someone posted here a few days back. Interesting that his take on WFH is very much like what I’m seeing.

    Scott Horsley (55:30): “Thanks, Mr. Chairman. You said in your opening remarks that the economy in many ways had proven more resilient than people expected, and that reflected the adaptability of both households and businesses. Are there adaptations that caught you by surprise, maybe related to remote work or new ways to do on-site work, in-person, face-to-face work that the economy has proven tougher than you expected at the outset of this pandemic?”

    Jerome Powell (56:02): “Well, yes. So I think if you go back to the beginning, there was a real concern. I mean, just take the financial markets, for example. Suddenly, all of those big buildings all over New York City and all around the world where people work in the financial markets with terminals and everything, everybody had to go home and they had to take their terminals with them. And I think there was a real concern that there would be a tremendous loss of functionality just at the time when the financial markets were under historically difficult conditions. And yet, it worked out. And I think people, many people in the financial sector, are still working with their terminals at home, including people on trading floors or on virtual training floors. Now, some of that’s reversing now, but we have definitely learned that we can do more work from home in many, many different lines of work.”

    Initially there was great skepticism that WFH would be even barely functional. And the big reveal was that for many high end industries, tech, finance, law, accounting… people adapted quite well.

    As he says some people will come back, all these companies are not going to stay at 80-90% remote. But managers, investors and top policymakers are not going to ignore the fact that we are getting pretty respectable productivity without needing to bring people on site. And for high cost locations this is going to lead to some decisions about what and how many jobs really need to be in those locations.

  10. Also very notable that rents (and apples) are still dropping post vaccine. There was some sentiment here that once a vaccine was out people would rush back to SF to ‘front run’ the supposed wave of returnees.

  11. What I think could’ve happened is tech-people who’ve been thinking about having kids – did so and moved to the suburbs. And people with kids cooped up in the city, made the move to the suburbs. Or to out of state.

    Young people cooped up with other young people in expensive rentals, fled to free rent at parents’ or low rent elsewhere. Or more likely to Austin & Florida where everything is open, offering night and social life prospects with the benefit of low-cost rent.

    I don’t think the family types will return. I think it will be a while before young people re-populate the city. Among the returning young people types, the home buying types, between WFH and more value for $ (larger home, pool, pony etc) will probably reconsider. It might take a while before young people accumulate enough wealth to restart the buying boom to support the prices. There is a boom in stock market, some might try to realize those gains in real assets. However, other booming RE markets such as Florida, Texas, Utah and our own Bay Area neighborhoods etc. have emerged as potential competitors for these investments now and likely also into future.

    Personally, earlier today I just finalized the decision to leave the city and the Bay Area.

    1. What do you base all this off of, as the SF single family home market has continued to maintain its high levels? I continue to not understand why that clear fact is not ratable by posters on here.

      1. Not enough volume to support those price levels (this is specific to my neighborhood).

        From my point of view I had to make a choice between:
        #1 $0 to low debt and relatively significantly better lifestyle (somewhere else)
        #2 $$$$debt with potentially high returns but compromise on everything else (SF)

        Option #1 also has lengthier exit times but it tracks inflation similar to Bay Area average.

  12. Many are in denial that this is a long term trend and a semi-permanent new normal. Fewer jobs in SF and fewer people wanting to live here. Yelp announced today it is subleasing its SF headquarters. 10 floors at 144 New Montgomery. That will be another 150K or so feet of space added to the empty space in SF. And several hundred jobs no longer in SF. For now it is keeping a headquarters in SF but don’t be surprised to see an eventual formal relocation out of the City by Yelp.

    Out of curiosity, where are you relocating to?

    1. Sorry, don’t want to share the details. We just found a place where our children could go to a decent school in person and which doesn’t cost an arm and a leg.

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