CFAH

While the rebound in San Francisco apartment rents has slowed, the weighted average asking rent for an apartment in the city has ticked up around 1.5 percent ($50) over the past few weeks to around $3,325 per month.

As such, the average asking rent in San Francisco is now 9 percent higher than it was at its pandemic-era low, which we called at the time, but it’s still 19 percent lower than it was prior to the pandemic and 26 percent below its 2015-era peak, with the average asking rent for studios and one-bedrooms having only rebounded around 6 percent since May (versus an average increase of around 10 percent for larger, roommate-friendly units).

And while there are now 50 percent fewer apartments listed for rent in San Francisco than there were at the beginning of the year, which includes units in larger buildings as well as one-off rentals, there are still 35 percent more units listed for rent in the city than there were prior to the pandemic having hit and the implied vacancy rate has actually ticked up over the past few weeks, reversing a six-month decline in listing activity.

Our ongoing analysis 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. We’ll keep you posted and plugged-in.

Comments from Plugged-In Readers

  1. Posted by Panhandle Pro

    Big name tech companies are in the headlines about delaying office re-openings. Anyone know what the situation is in industries like finance, consulting, or law?

    • Posted by jag149

      My law office (12 attorneys) has been open since June of 2020, but I’m not sure that’s a good data point for what (I think) you’re asking, because none of us moved to Tahoe or ditched our expensive apartment to stay with our parents in Ohio, etc. (Bear in mind, attorneys tend to be older than tech workers, and we’re specifically licensed to work (and usually live) in the state, so it’s a different kind of trend.)

    • Posted by DK

      I started my fully remote (tech) position in SoCal. We’d had a lease in SF but let it expire. I came back to the city anyways because I prefer the city over my hometown in almost every way (San Diego’s very safe for its size – culture doesn’t quite stack up though).

      • Posted by socal

        San Diego is 1-2 hour train ride to downtown LA. The culture in an Alpha++ major world city isn’t even on the same level of SF.

        • Posted by OMN

          Are you suggesting people move to San Diego because of the culture of LOS ANGELES? By that logic, you can also take a 1-2 hour flight to LA from SF, among many other places

          • Posted by socal

            Not just that, but the San Diego weather, beaches, cleaner neighborhoods, and Mexican food.

            And more like a 4 hour flight to LA from SF if incl. arrival at airport at least 90 minutes before flight leaves and not accounting for flight delays.

        • Posted by DK

          I was taking Flixbus or Amtrak up to LA almost every weekend actually. It took 1.5-2 hours or more depending on traffic. It made living in San Diego more fun but the trip takes a lot out of you. I like LA a lot and could’ve seen myself there. SF has the advantage of cooler weather, walkability, and parks.

    • Posted by thattechguy

      I’m in tech, and we’re all forced to go back until January.

      In addition, all my rentals are filled with facebook and google people with the highest rents I’ve ever had.

      • Posted by hotcha

        Gone from back to the office in September then to October now to January…

        If you haven’t figured it out by now it’s the virus that’s going to set the return to office date.

        • Posted by thattechguy

          Not really, it’s going to be vaccine effectiveness towards the virus.

          The pendulum is swinging back – feel free to fight it, but I wouldn’t bet on Delta winning.

          • Posted by anon

            thattechguy, can you clarify please? Do you mean that you can’t go back to the office until January? And you are talking about apartment rentals with the highest rents ever? where?

    • Posted by Notcom

      Well, there was this recently: Wells Fargo postpones return-to-office plans by a month amid coronavirus surge. Admittedly, like the other responses rather anecdotal… but of course some anecdotes are more equal than others.

    • Posted by shza

      My 100+ SF law office (part of a large global law firm) initially planned to reopen in September, but that’s now been pushed back (for now) to November. Different dates/rules in offices in other countries, but we’ve done that for all of our U.S. offices.

  2. Posted by Sean

    Cue the kabuki gestures… supply/demand is a myth, landlords are holding back apartment listings to drive up the price (but supply/demand is a myth?), this is asking rent/not actual rent, etc.

    • Posted by two beers

      Cue the premature and performative drive-by triumphalism.

      Supply & demand is an a priori model of idealized markets, ceteris paribus. It works great on paper and can model some real world markets in consumer goods and commodities where there is reasonably symmetric information, liquidity and fungibility of goods, limited shelf-life, low emotion, linear and knowable equilibria, unconcentrated market control, etc. The idea that S&D models every (or even most) markets is a myth. Anyone who thinks S&D is a scientific “law”, despite the existence of exceptions like Veblen goods and Giffen goods, has earned the scorn of actual scientists.

      In general and ceteris paribus, increased supply puts downward pressure on prices, but there are many ways suppliers can get around in markets where there is asymmetric information, illiquidity and non-fungibility of goods, high emotions, unlimited shelf-life, unknown equilibria, concentrated market control, etc. An actor with outsized market control and the financial capability to withhold supply — like, say, NEMA, which lists only a handful of its hundreds of vacancies — destroys the model’s usefulness as a predictive tool..

      You wouldn’t work for Greystar by an chance, eh Sean?

      But thank you for emphasizing that asking rents are not actual rents – I do appreciate the clarification!

      • Posted by not sure why this is all caps

        Well, he said “ceteris paribus” twice, so he must be correct.

      • Posted by heynonnynonny

        Do you think it’s unfair that grocery stores don’t put all their stock on the shelves for you to poke at? That the freezers in the back room are part of a conspiracy to raise prices by concealing supply?

        • Posted by two beers

          Now we’re getting somewhere! (and thank you for skipping the ad hominem)

          You’re trying to reason this out – which is good! – but through no fault of your own, you are working with muddied concepts, so you formed an inapt analogy.

          Grocery stores sell (1) consumables that are (2) liquid (no jokes, please!), (3) fungible, and (4) short-lived. These are just four distinctions between property and frozen pizza.

          I’m sure you could come up with still more distinctions between the two markets that show how the respective sellers have different incentives.

          Try it! Critical thinking is fun!

          • Posted by Notcom

            So your saying my idea for a pizza-leasing business might not be a winner ?? And let me be clear what I mean by winner… a winner for ME: the plan is to plant a few stories – dropping the right words (“disrupt” “empowered” “carbon neutral”, ” curated”, “artisan”) lose as much money as possible, and then wait for some college dropout to make a bid…hoping to flip it to a FAANG.

          • Posted by two beers

            Sounds good! (by which I mean, it’ll surely lose millions!)

            Can I interest you in a barely-used bagel&boba™ delivery app? Just swap out the pix and text, and hey presto, notcomly pizza will be unicorn ready!

            We also have a foosball table and lime green egg chairs for your “creative” office space, cheap. The kids love it!😁

          • Posted by heynonnynonny

            Nope, your example was NEMA units, which are relatively interchangeable. They don’t need to put more than one of each type on the market. When they sell one, they just put another one on the market.

            The main thing you seem confused about is that sellers are not obligated to sell or to market everything they own. It is perfectly reasonable, even sensible, to have a reserve price. As at the grocery store, the fact that they have a bunch more supply in the back is not a sneaky way to drive the price up. Price discovery is based on completed transactions not inventory.

            I’m also not sure how you can reiterate the dubious assumptions behind S/D while simultaneously suggesting that prices are too high because supply is being artificially restricted. I’m guessing that you don’t actually read what you write.

            You know, in the past you’ve been a welcome counterpoint to the standard nerd libertarians, but you’ve gotten really insulting and intellectually lazy. My mistake for replying.

          • Posted by two beers

            “sellers are not obligated to sell or to market everything they own.”

            I agree! It’s in the seller’s self interest to limit supply. For S&D to work in the real world as it does on paper, supply has to be brought to market. Otherwise, how can the variable be quantified? The model assumes all inventory is made available, otherwise you bump into the ceteris paribus hedge our friend above denigrates.

            Buyers lose bargaining power when supply is hidden. If it’s in sellers’ self-interest to constrain supply in a falling market, than why does the real estate industry always yell that the only way to bring down housing costs is to build more “market-rate” supply? It’s an inconsistent, contradictory paradox that only makes sense when you realize that the real estate industry itself well knows that building “market rate” housing puts upward pressure on prices, not through some easily-gamed S&D tautology, but through the process of gentrification.

            You misunderstand my skepticism. S&D would work in the real world if all the assumptions and conditions were met. That’s why it’s prefaced in textbooks with ceteris paribus, because in the real world, many of those assumptions and conditions are not met. Therefore, the model breaks.

            The map is not the territory, and if the data isn’t known or accurate, it’s not even a very good map

          • Posted by wilson

            But is supply really being held back long term or just simply not being listed. For non rent controlled properties it just seems like its better to get some money then no money. I understand the issue with loan covenants and not wanting to entice existing tenants to ask for reductions. But these seem transitory. Eventually getting some money seems like it will beat out getting no money. If you initially get a lower rent, you can just raise rents later. What’s the real downside to the some rent option?

            For rent controlled units it makes sense not to lock in a lower rent if you think the situation is transitory. In a sense, for rent controlled units the perception of future rent trends (by landlords) has a impact on supply. Perception/Uncertainty of inflation trends factors in here too. Seems like that’s an issue with rent control, not supply and demand.

          • Posted by Sean

            Let’s get to the point: Did the construction of the Nema…
            (a) Increase prices for the existing rental stock in SF
            (b) Decrease prices for the existing rental stock in SF
            (c) No impact

            Some would suggest (a) is correct– construction of the Nema increased rental prices. If true, the logical conclusion is that the more units Nema keeps off the market, the lower the prices for other units across the city?

  3. Posted by john p downey

    I love 2 beers 🍻 Don’t think he is insulting nor intellectually dishonest. A little snarky? Perhaps, but so is everyone else here. I am semi literate at best, but even to me the idea of comparing Nema to Trader Joes supply of goods is a tad odd.

  4. Posted by carla

    Man I hope [rents stay down], I can’t afford to live in my own hometown anymore and I don’t even work minimum wage. Tired of these money hungry greedy realtors and landlords, don’t they see people dying on the street?! FOH.

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