Despite some misreports in the media, apartment rents in San Francisco haven’t started to rebound, as we outlined last month. And in fact, the weighted average asking rent for an apartment in the city has now inched down to $3,050 month, which is down 24 percent on a year-over-year basis, down over 25 percent since the pandemic hit, and nearly 32 percent below a 2015-era peak, with the average asking rent for a studio in the city holding at under $1,900 a month and down nearly 35 percent from peak.

That being said, the net number of units listed for rent in San Francisco, including units in larger buildings as well as one-off rentals, has dropped nearly 10 percent over the past month. But even with the net absorption of vacant units, listed inventory levels are still 95 percent higher than they were at the same time last year.

Keep in mind that our analysis of the rental market is based on a subset of over 100,000 listings, going back going back to 2004, that we maintain, normalize and index on a monthly basis. And as always, we’ll keep you posted and plugged-in.

33 thoughts on “Asking Rents in San Francisco Continue to Slip, But…”
    1. We haven’t seen any credible data to suggest that the current reduction in listings is being driven by anything other than positive net absorption of available units versus vacant units being withdrawn. But again, despite the 10 percent drop, there’s still twice as much inventory on the market than there was at the same time last year.

      1. What happened to the proposed rental unit database? Did it die in committee? Die at the BOS? I haven’t heard anything recently about it.

  1. The fact that an upward turn in the market is being debated signals to me the cycle’s bottom was in the past.

  2. As a landlord, I have a pessimistic view on rent recovery…I think it will take 5 years, or more, to fully go back to 2018 level.

    And SF is not alone in the rent slump. South Bay is no better IMO. Many many many listings have been on the market for 150+ day with 1 or 2 inquiries.

    This is just the new reality that we all need to adjust to.

  3. I’ll take a loss on this one. I figured the bottoming out was going to be in the Jan/Feb/March timeframe (I was right), but we’re now in late April and no sign of meaningful improvements (I was wrong).

    June 15th is when the California lockdowns officially end. Around then is when a huge number of people will be fully vaxxed + two weeks, and when I’m hearing some offices will meaningfully begin letting people in. I’d bet July’s report (looking back at June) is when we’ll see prices jump.

    1. “but we’re now in late April and no sign of meaningful improvements”

      So we don’t know if we’ve actually bottomed out, which means your first prediction isn’t necessarily correct.

      1. True. Given the points made earlier (vaccines, offices opening) and the fact that it’s been flat for three months, I have a strong conviction this is the bottom, but it might not be.

    2. That’s just 15 days before the eviction moratorium ends. Possibly an increase rental stock in the following 30 to 60 days.

    3. If you think the offices are going back to 2019-era activity anytime in the coming years, you’re in for a big surprise.

    4. The work-at-home is a big exaggeration. There was work at home three or four years ago and Google bought the Pavilion mall in West Los Angeles converting a mall to 500,000 square feet of Office Space.

      1. I think it’s weird that commercial real estate bulls think every white collar worker works for Google. Google is an outlier, it makes so much money it can afford to waste money on unneeded property, most other companies can’t, so anecdotes about what Google does doesn’t apply to most of the market.

        But more to the point, you seem to be in denial about the fact that things have changed since three or four years ago. Since that time, we had a world-wide experiment in work from home that affected every company, and it has proven that not everyone needs to deal with a crushing commute to be in an office in San Francisco or big cities like it in order to work at a screen and keyboard and hand over outsized returns to real estate investors.

        From What Happens When a City’s Largest Employer Goes ‘Work From Anywhere’: Inc. — the anchor tenant of the 61-story building’s Class A office space — announcing a permanent “work from anywhere” policy that lets employees remain on remote or flexible schedules after the pandemic ends. As San Francisco’s largest private employer, the customer-management software giant is a heavy hitter on the list of companies with similar plans set to affect downtown office spaces, including Twitter, Facebook and Square, prompting tough questions about the vitality of the city’s core and overall economy. “This is a much bigger urban workforce shift. It’s saying, tech doesn’t need to be anywhere,” said John King, the San Francisco Chronicle’s urban design critic.

        No one is saying that everyone is going to permanently work from home, any more than everyone is going to work for Google.

        But real estate prices are heavily influenced by the margins, and if the highly-compensated white collar workers who do not work for Google start declining to come into The City, either via commuting or buying homes here, due to WFH policies at companies like Salesforce, then it’s no exaggeration to project that office prices are not going to return to pre-2019 levels any time soon.

  4. Interesting. Wall Street Journal reported rising rents today (4.24.21) in SF for March of +3.4% compared to month prior.

  5. Out of curiosity, is it necessary for rents to recover to their highest levels for landlords to have a profitable rental business in San Francisco? I understand that there is a natural progression to rent increases, but hasn’t the past decade been a bit of a fluke as far as how fast and how much rents increased?

  6. Rents in SF bottomed out in January.
    The Superbowl weekend was like a switch and demand got turned back on.

  7. If you would like some anecdotal info, I reside in a large rent controlled building with over 30 units. 5 longer term tenants have left just over the past month, either moving out of city or buying locally given low rates, etc. Tenant turnover here was extremely rare until this spring.,.

    Housing data appears very volatile now given the vaccine rollouts. Buckle up…

    1. This is an interesting point. There may be many renters who have 1) saved a lot of money due to lockdowns 2) had stock go up / other wealth 3) realize low rates and buy an entry level condo instead.

      1. There are also many renters who saved a lot of money prior to lockdowns, just waiting for this sort of market adjustment. In my case, though, the lockdowns made me realize an entry-level condo in SF won’t satisfy me — so I bought a vacation home out of state that I’ll ilve/work in half the year, and spend the other half in my rent controlled studio in SF, thanks to work’s new location flexibility.

  8. If you are a young single professional, are you going to want to live in the burbs? or be in the SF?
    Demand comes back when the energy comes back. It will. Always does.

  9. For argument’s sake, say apartment rents stay down. SF is still the second most expensive city in the country, and among the most expensive in the western world. Why all the hand-wringing? It is a problem only for those who bought or built based on the greater-fool theory.

    1. Agree. It’s interesting to follow the data available but unless you bought an income property in 2020, your earning potential is greater than it was 5 years ago and will continue to rise despite this blip.

      Anecdotally, I’m hearing of so many life-long renters voluntarily leaving the City, must be a lot of landlords rejoicing to get those units back to market rate.

        1. You’re not getting into the spirit of this: anything less than the Great Depression is a “blip” ; that was a “burp”, and if this somehow ends up being a burp too – or even a belch !- then we’ve solved the affordability problem. So this is clearly a good thing. C-l-e-a-r-l-y.

  10. Earlier this month we had a 1 bedroom above Dolores Park that took 10 days to fill from date of listing to check in the bank. My listing agent tells me she has a laundry list of others for our next unit that is turning over now. Ironically, It looks like we’ll net ahead overall on gross rents due to one of the turnovers being a long term tenant. This was a 5 unit building we closed on in the Fall of last year. It’s been nerve racking with much second guessing but with the 1031 deferral advantages gained through the sale of a condo preceding this acquisition, and surviving the recent turnovers we are feeling more optimistic about the future.

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