Asking Rents in San Francisco Jump, Poised to RiseAugust 2, 2022
Having hit $3,575 at the end of June, the weighted average asking rent for an apartment in San Francisco has since jumped another 5 percent to $3,750 a month, which is still 11 percent higher than at the same time last year, which is unchanged from June, but nearly 23 percent ($700) above last year’s nadir for rents with the net number of apartments currently listed for rent in the city 20 percent lower than prior to the having pandemic hit.
All that being said, the average asking rent for an apartment in San Francisco, which measures two and a half bedrooms when counting a studio as having one, is still around 9 percent ($350) lower than prior to the pandemic and 16 percent ($715) below San Francisco’s 2015-era peak, with the average asking rent for a studio having ticked up to $2,200 a month (which is 14 percent lower than prior to the pandemic and still 24 percent below peak).
At the same time, the weighted average asking rent for an apartment in Oakland ticked up 2 percent over the past month to $2,550, which is 8 percent higher than at the same time last year and 12 percent ($270) above last year’s nadir, with the average asking rent for a studio having ticked back over $1,700 a month, which is only 4 percent lower than prior to the pandemic but nearly 22 percent below peak.
As such, the average discount for renting in Oakland versus San Francisco, which had dropped from 35 percent prior to the pandemic to 25 percent early last year, has ticked back up to 32 percent.
Our analysis of the rental market in San Francisco and Oakland is based on over 200,000 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
How do SF pessimists explain this, given that return-to-office numbers still lag, and quality of life issues are supposedly worse than ever?
Along as VCs continue to set fire to piles of cash on Market Street, demand for housing will remain strong.
But even as tech workers disperse and VCs spurn San Francisco, actual venture dollars are still clearly concentrated in Northern California.
The Bay Area attracted $52.3 billion in VC cash in the first half of the year, according to Pitchbook’s NVCA Data Monitor. That’s 36% of the nation’s total. New York was a distant second with $19.8 billion, or 14%, and Los Angeles third, with 9%.
Fast-growing Austin, which has attracted high-profile startups including Elon Musk’s Boring Company, won just $3.4 billion during the same period. And Miami took in $2.5 billion. That’s a paltry 2.6% and 1.7% of the total, respectively.
For some founders, especially younger ones still forging connections, real-life offices in the Bay Area maintain their allure. “There’s a lot of folks that we talk to that are extremely ready to go in office,” said Dalton Caldwell, a group partner at Y Combinator, in a recent video update on the startup accelerator. Michael Seibel, Y Combinator’s chief executive, added, “We’re also seeing a lot more interest in San Francisco.” Seibel said that some tech workers who left the city for buzzy destinations like Miami and Austin have quietly returned.
Ahhhh the great demise of San Francisco
As predicted before
Glad to hear these stories and here to the city coming back strong!
Inflation. At least for a chunk of that. With inflation running at over 9%, a 11% nominal YoY gain isn’t that much to write home about.
Surely some people are coming back compared to the depth of the lockdown times. But if you look at the 16% nominal drop since the 2015 peak and add in the about 25% inflation since 2015 you get a 41% real drop in rents from the peak. That’s the number that people should be looking to find an explanation for.
In these volatile times people need to remember that percentage change numbers don’t add up in the normal way. i.e. A 50% loss followed by a 50% gain doesn’t bring you back even. ($100 after a 50% loss is $50. Increase that by 50% and you get $75) Combine that with the money illusion of looking at nominal rather then real prices and it can be tricky to make an eyeball judgement of how things are going.
I think the allure of blue cities and blue states are starting to come to realization after the ultra right wing Supreme Court has actually implemented policies that used to just be “teases.” Now that the dog has finally caught up with the car, even traditional conservatives are questioning everything. Look what happened in deep red Kansas last night.
Doesn’t the very fact that a “deep red” state has seemingly rejected such a policy suggest just the opposite: that people don’t need to go to blue areas to find moderate policies ??
Identity politics is the last resort of a landlord, RE speculator, or used house salesperson.😄
Methinks use of the term nearby is such a sign…but point noted.
Kansas is its own thing when it comes to this particular topic, for many reasons.
Optimism a safe bet for SF!! while also recognizing City government perpetually in need of great improvement…
it could be that interest rates increased and buying became a lot more expensive. so as those looking for housing resign themselves to renting. that increase in demand drives rents up
Yes, increasing interest rates can drive up rents, which feeds back into inflation numbers. This is unfortunate, but there are many positive inflationary feedback cycles like this.
That’s part of the reason why, although no one wants a recession/unemployment as a end goal, it turns out its hard to tame inflation without some type of recession/unemployment/demand destruction.
or “it could be” facile nonsense. By conflating monthly payment with actual price with, one can make the same argument when interest rates drop. Your argument would make more sense when interest rates drop, because lower interest rates fuel asset purchases, which increases actual asset prices, even though, and partly because, monthly payments are lower.
So the argument in short is: interest rates go up, rent goes up; interest rates down, rent goes up. It’s win-win obfuscating voodoo claptrap that you can get away with only because most people (including most economists) are economic illiterates.
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