Asking Rents in S.F. Slip, Listings Drop to Pre-Pandemic LevelsMarch 1, 2022
Having ticked up in January, the weighted average asking rent for an apartment in San Francisco slipped around 2 percent in February to $3,340 month, which is roughly 6 percent higher than at the same time last year but still 19 percent ($760) lower than prior to the pandemic and 25 percent below San Francisco’s 2015-era peak.
At the same time, the number of apartments listed for rent in the city, which had ticked up in January, dropped in February and listed inventory levels are now back to where they were prior to the pandemic, but with 17,000 fewer people in the labor force and 21,000 fewer people employed as of the end of last year.
Our analysis of the San Francisco market is based on over 150,000 data points 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.
Comments from Plugged-In Readers
Based on my own much more limited data – my own rentals – rents one year ago were down about 18% from my peak, which actually occurred in 2018, but are now only about 6.6% below that peak. Of course, my data is reflective of only a couple of units in one specific neighborhood, so I’m not contesting what you say. And my units rent for less than the average rent you quote, so it might be that rents didn’t fall as far for more modest apartments than “average” and have recovered faster.
I suspect that the Socketsite data mostly reflects larger properties with professional management, because nobody is reporting rents on smaller mom and pop rentals like mine. They are sort of different animals. Of course, both animals swim in the same pool, but the effects of rising and falling market rents are sometimes felt less rapidly by owners of only a small number of units.
Our analysis is based on the aggregation of data from actual listings, which includes mom and pop rentals which are listed online, not an industry report.
And while we don’t know your unit mix or specific neighborhood, we’ll note that two-bedrooms have outperformed the rest of the market, which is typical, while studios and larger units have taken the biggest hits and remain the most depressed.
Is there a leading theory as to why two bedrooms maintain value? More likely to be couples who move less?
It’s work from home couples that need the second bedroom as an office. Or well off singles. Most of the couples that used to rent a 1-bed from us rent 2-beds now, whereas studio renters upgraded to 1-beds. Studios remain hard to lease and are still off prepandemic numbers significantly.
Ah, I missed the all important word: ASKING rents, which aren’t necessarily the same as what units actually rent for. It’s a pity that actual rents are pretty much impossible to obtain.
I have definitely noticed an increase in prospective tenants who want to negotiate a lower rent than the asking rent. I suspect there are owners out there who are willing to do so. I have sometimes made small concessions; a $100 rent reduction is only $1200/year and if you rent the unit a couple of weeks sooner with the reduction, you’re money ahead in the first year, at least. But it might not be a good move if the tenant is likely to stay for a long time. I try to do my homework and price my units fairly, that requires some work in advance to figure out what today’s fair market value is.
It would be interesting to know how the average starting rent compares to the average asking rent, but I doubt that’s data we will ever have.
Thank you for the work you to do aggregate the data that you can actually get your hands on.
“It’s a pity that actual rents are pretty much impossible to obtain.”
Then you’ll no doubt be thrilled to learn that starting this July, SF Ordinance No. 265-20 will require residential LLs to report their number of occupancies and vacancies, number of BRs and baths per unit, approx. sq footage, and base rent. Failure to do so will suspend the LLs right to raise the rent.
It will take several years for the inventory roll out to cover all types of LLs, because many LLs apparently don’t have access to this seemingly crucial information about their own properties. Poor beleaguered LLs, we feel for you! The penalty is negligible and easily remedied by the LL simply reporting the required data. The data will surely be easily gamed and difficult to verify, but it’s a start and will help shed light on a crucial yet largely opaque sector.
Good start to addressing the information asymmetry between landlord and renter
Next, we might want to look into obtaining information relating to income levels and other property ownership of tenants. This might allow for a more balanced approach to the government regulation of housing units.
After all, the entire point of obtaining the landlord information is to level the playing field, right?
Luckily for the local penny ante landlord class, there are no policy changes required to obtain information relating to income levels of tenants, because landlords collect plenty of financial information from prospective tenants prior to “approving” them to sign a lease!. Landlords want you to prove that you have the ability to pay the rent by having you provide all kinds of financial information, and after they have it, they know all about the personal finances of their tenants, but the tenant doesn’t know much about the finances of the landlord’s business — that’s the information asymmetry DK is talking about.
Some of the leases I signed when I was younger and when there was more competition for rental apartments required me to divulge so much personal financial information that the landlord could have easily just told me they approved another applicant and then turned around and opened up a credit card in my name and I wouldn’t have known about it until it showed up on my credit report.
‘parklife’ and the other landlords who spout this nonsense about tenants “taking advantage of rent control” to own property elsewhere can get away with it when they are popping off to other landlords and real estate agents in their foursomes while walking up the back nine at TPC Harding Park, but I think they know, from looking at the applications they receive, that while it may happen, it’s not common.
So obviously, tenants should have no problems divulging this information so that we can assure that rent control is protecting those among us with the greatest need for housing. If the goal of government is to make every transaction fair and equitable, then let’s get on with it. This incremental punish the “penny ante landlord class” is tiresome.
No the point of the rental registry is to, in theory, better police re-rentals after various evictions. The actual rents paid by long term tenants is probably embarrassing given how much of the local economy depends on squeezing young migrants to fund comforts for long term residents.
Comments are closed.