CFAH

The weighted average asking rent for an apartment in San Francisco ticked down another percent over the past month to $3,325. But as we noted last month, asking rents in San Francisco typically tick down in the fourth quarter with a seasonal slowdown in the market. And in fact, while rents were running 3 percent higher, on a year-over-year basis, last month, they’re now 5 percent higher than at the same time last year and the number of units listed for rent in the city dropped 20 percent over the past month and is down 60 percent, year-over-year.

All that being said, the average asking rent in San Francisco still nearly 19 percent ($775) lower than prior to the pandemic and 25 percent below (its 2015-era) peak, with the average asking rent for a one-bedroom in the city hovering around $2,800, which is 20 percent below pre-Covid levels and down over 23 percent from peak.

And once again, while a drop in rents was to be expected, based on typical seasonality, a typical slowdown should mute expectations for a full-blown rebound and rapid rise in rents.

Our analysis is based on a subset of (well) over 100,000 listings going back going back to 2004 that we maintain, normalize and index on a monthly basis (or weekly when volatility is up). We’ll keep you posted and plugged-in.

Comments from Plugged-In Readers

  1. Posted by Panhandle Pro

    With each new variant or COVID spike, people care less and less about COVID. There will be one more spike this winter (like last year), and it will die off quickly in Feb/Mar (like last year). Rents will start to increase in the spring, due to a combination of seasonality and office reopenings.

    With two full years of office closures, though, lifestyles and work expectations have permanently changed. The city is also full steam ahead on building. The pipeline remains large, which will continue to flood the market with more supply. It will be 3-5 years before rents return to pre-pandemic pricing, in my opinion.

    • Posted by Notcom

      I think there’s reason it “die(d) off quickly in Feb/Mar” (Hint: It starts with a “V” and ends with a sharp point) What do you see replicating that this (next) year ??

      • Posted by Panhandle Pro

        Even with vaccines, people got spooked by the Delta variant this past August and behaviors changed, including offices delaying re-opening.

        I expect the same thing to happen with Omicron, except with a more subdued reaction / fewer changes to behavior. The big question related to rent increases is whether Omicron pushes back office reopenings or not. My guess is no, but it’s too early to tell.

  2. Posted by Pablito

    It’s good the numbers are leveling off. My read is the people who wanted to leave have left. But seems way too early to to draw any conclusions about long term effects on the market. If omicron variant has half the death rate more people will go back to downtown offices, but if the next variant has double the death rate, more people will move out.

    It’s all just speculation really. No one really knows.

  3. Posted by EBGuy

    Over in the East Bay the big ole Space Available for Lease has appeared in front of our commercial office building (we were pretty much full up at the outset of the pandemic). I’d estimate that the building is at around 75% occupancy. And we’re operating without a lease at this point…

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