The weighted average asking rent for an apartment in San Francisco has effectively held at around $3,600 over the past quarter, which is less than 3 percent higher than at the same time last year, 12 percent lower than prior to the pandemic and 19 percent below its 2015-era peak of nearly $4,500 a month, with the average asking rent for a one-bedroom in San Francisco holding at around $3,000 per month (which is less than 2 percent higher than at the same time last year, 15 percent lower than prior to the pandemic and 19 percent below peak).

At the same time, the number of apartments listed for rent in San Francisco ticked up a (1) percent over the past month, with 13 percent more units now listed for rent than there were prior to the pandemic, the inventory of condos and single-family homes for sale across the city ticking up, and the cost of capital having jumped.

Our analysis of the rental market in San Francisco is based on over 170,000 data points going back to 2004 that we maintain, normalize and index on a monthly basis, not simply a few years of data or recollections. We’ll keep you posted and plugged-in.

49 thoughts on “Rents in San Francisco Holding Below Pre-Pandemic Rates”
  1. What do other commenters think is a good goal for SF rental prices of a one bedroom? We don’t want to be the next Detroit, but probably not healthy to be what it was in 2015 either. Is the “30% of gross income” still a rule of thumb that can be applied to work backwards towards a number using census income data?

    1. A good goal would be for there to be a correction in rental property in SF. Maybe 30% off peak. Maybe would incentivize property managers to… manage their properties.

      1. A significant drop in rents would happen if rent control was abolished entirely and rental laws relaxed. Imagine all the 3 beds rented at <$1K & such suddenly came on the the market, prices would drop tremendously and there’d be much more opportunity for upward mobility. But thanks to Preston/similar digbats rents will be high. Probably the only good thing I’d have to say about him. But of course it’s politicians like him that will keep rents high, inequality more extreme, and old timers gaming the system at the expense of new comers.

        Another factor that could bring rents down significantly is to eliminate all the (taxpayer provided) City non-profit funding in the Tenderloin, clean that area up where people would want to live and and tens of thousands of units would be available at low prices. This would be good for the City and downtown.

        1. Sue Yu wrote:

          A significant drop in rents would happen if rent control was abolished entirely and rental laws relaxed. Imagine all the 3 beds rented at <$1K & such suddenly came on the the market, prices would drop tremendously and there’d be much more opportunity for upward mobility.

          What there would be is much more opportunity for windfall revenue growth to accrue to landlords, which of course is why you posted this.

          If it were true that abolishing rent control entirely would cause a significant drop in rents, why would the most frequent and vociferous proponents of this policy change be incumbent landlords who are leasing units in rent-controlled buildings? These are people who desire the increased revenue from a significant increase in rents that would happen when tenants of rent controlled buildings are displaced. You are not fooling anyone with this rhetoric.

          The one place such a change was tried in the United States, namely in the Boston/Cambridge area in the mid 1990’s, not only did the formerly rent controlled units go up in price, the previous market-rate units also became more expensive. That’s because once landlords could charge whatever they wanted for their units, they tended to engage in an ersatz form of value-engineering and target them at high-end potential tenants.

          1. Why shouldn’t landlord make money from their investments?

            Why should renters and government rob the landlord?
            Everyone is free to buy their own place if they don’t want to rent.
            The idea of rent control is insane.

          2. Replying to “inthemarket”

            When you’re dealing with someone’s home, I think it’s fair for the government to step in, to some degree, to prevent sudden, extreme price hikes. We’re not talking about a can of black beans going up 10% here. It would be incredibly chaotic for society if people were being displaced regularly.

            That being said, I think the current rent control percent in SF is too low. It generally hovers around 1.5% on average. 5% per year feels like a more fair number to me.

          3. at the very least , it should be tied to inflation to some degree. when small mom and pop landlords can only raise 1.5% and inflation is almost always more than double, they just keep losing.

          4. ‘Why shouldn’t landlord make money from their investments?”

            If the landlord cannot make money from their ownership of land, perhaps they should resort to selling their labor, same as the tenants from whom they derive their income.

          5. @jimbo completely agree. Should be at ~3% minimum to keep up with inflation. I think there should be an additional percentage point or two so that it somewhat tracks with actual price increases we see from non rent-controlled properties. For example, rents went up 50% from ~$2300 in the 2010-2012 doldrums up to ~3400 in the 2015-2019 timeframe. It feels fair to me for other properties to capture maybe half of that value. As I do some back of the envelope math, maybe 4% is better.

          6. In my earlier comment in this thread, I thought it was obvious that the context was rent controlled buildings.

            If you as a landlord purchased an S.F. rent-controlled building, no one is “robbing you” as a landlord, the property was discounted to reflect the rents available to collect going forward (i.e., the impact of local rent control regulations) at the time of purchase. Every landlord is still free to purchase a market-rate building if they want to charge market-rate rents.

            When someone says “Why shouldn’t landlords make money from their investments?” that is one of those rhetorical questions like “what is wrong with wide availability and normalized use of marijuana?”. Your interlocutor is in both cases saying that whatever the answer is, they aren’t going to accept it, so there is no use trying to reason with them.

          7. No landlord is being “robbed” by the current rent control laws. However, if we want an equitable, long term equilibrium between landlords and tenants then the rules need to reflect the basic inequity of SF rent control as it applies to small properties. There are a large number of 2-4 unit buildings in this city, all under a rent control regime that is more onerous every year and that are primarily owned by mom and pop investors and/or owner occupiers.

            The tenant activists paint all landlords as faceless greedy capitalists, yet these are their neighbors and providers of a significant percentage of the rental stock of housing in the City. If they want it to be a utility, then so be it, let all capital improvements and repairs be passed through (not a lesser percentage or subject to a hardship exemption) and let rental rates be based on CPI (not a lesser percentage of CPI) or better yet, a rate based upon wage growth as suggested/implied by an earlier comment.

            If we are to have a sustainable rent control regime, then there needs to be a balanced approach.

          8. You are absolutely right. You would have to allow supply to increase as well. Abolishing rent control is a great idea as part of an overall strategy. One tenant of that strategy would be the overall permitting and planning process so the supply can meet demand. One of the big reasons projects don’t pencil right now is the cost of regulation.

  2. Probably ⅓ of gross income is reasonable to use. Last statistic I read was that average household income in SF was about $119,000, which would impute an average rent target of $3305/month. So perhaps we’re not as far off as one might think.

    SF has always been an expensive place to live. Traditionally, many many single people shared an apartment with one or more roommates. I think that’s still achievable for many, but the idea that rents will get so low that anybody can afford to live in an apartment by themselves (on one income) is probably a fantasy for those at lower income levels.

    1. The Mayor’s Office of Housing and Community Development has a page where folks can check how their household income compares to the Area Median Income (AMI) level in order to see if they qualify for certain income based services.

      According to the 2023 MAXIMUM INCOME BY HOUSEHOLD SIZE table derived from the
      Unadjusted Area Median Income (AMI) for HUD Metro Fair Market Rent Area (HMFA) that Contains San Francisco, a one-person household with a 100% of median would have an income of $100,850.

      And yes, that isn’t the same thing as average, but you should pause to consider that half of households that size have an income of < the median. Many, if not most, of the households say a standard deviation above that mark probably own their homes and aren’t participants in the rental market. It seems to me that the relevant comparison would be the average or median household income of S.F. households who rent, not all S.F. households.

      1. It’s interesting that the 2-person household income isn’t much more than the 1-person income. I’m not at all surprised that income levels flatten out with larger HH sizes – presumably 9 person HH’s have many (not-working) children in them – but I would think many 2-person HH’s would have 2 adults… both working. If that’s the case here, then they must have much different types of incomes than the 1-person HH.

      2. According to The U.S. Census Bureau’s estimates (so, different data source), in San Francisco (the city and county itself), the median household income as recently as 2010 was less than $72,000. The median is so much higher now due to a few different factors, but the largest one is that we’ve had lower-income households being displaced at a rapid rate.

        The data documenting this phenomenon being readily available on the web, more investors, flippers and two bit penny ante landlords all over the world are attracted to the S.F. real estate “game”. Hopefully with the numerous stories about the so-called “Doom loop”, this behavior from remote investors will be curtailed in the next couple of years.

    2. Back in the late eighties I knew a guy renting a loft large enough to accommodate a furniture making vanity business in SOMA and he paid under 1K (in 80s dollars). The city in general felt much less economically polarized. I’d love to see rents much much lower than 3300. Below 2K would be nice. And we could totally do it, but we’d need to dismantle a whole lot of regulation and spring for way more subsidized housing.

      1. One thing to keep in mind is that the US dollar has lost over 70% of its purchasing power since the 80’s due to monetary printing and other factors. So ~3k is barely keeping up with the inflation in real terms.

    3. “SF has always been an expensive place to live”

      True, when I moved here 30 years ago some neighborhoods were expensive. But the difference is back then there were still affordable neighborhoods. Lower Haight, SoMa, The Mission, Potrero Hill, The Sunset, The Outer Richmond – were all neighborhoods with rental units that were affordable, even to artists.

  3. Landlord costs go up faster than inflation rate. LA Council voted to mandate air-conditioning in rental units, and it is coming to SF. With politicians increasing the landlords costs all the time, lower rents would mean bankruptcy for many landlords, as the SF recent -Lembis etc.- tells us.

    1. The Lembi family, the owners of CitiApartments, Inc., problem was that they were overleveraged.

      Landlords get to the pass along the costs of capital improvements — such as the installation of air-conditioning — to their tenants. Tenants who are primarily wage earners can’t automatically pass along their increased housing costs to their employers, all they can do is try to quit and find another higher-paying job, which in many cases requires moving, which in turn enables landlords to raise the rent on the unit.

    2. SF allows landlords to pass through costs of capital improvements to tenants in rent controlled buildings. Costs must be approved as necessary or reasonable, and spread out over time.

      1. The bulk of landlord costs are usually NOT capital improvements. So while both of you may be replying to the commenter’s poor CapEx example chosen to substantiate his initial statement, your replies don’t actually rebut his assertion about landlord costs going up. Instead they just unfortunately create a false narrative about how landlords get to pass along increased costs, which is not true. Most landlord costs are repairs and maintenance – dictated by service and materials costs which inflation affects significantly, yet landlords do not get to pass this to existing renters and lately cant even take the promised CPI increase due to newly implemented allowable rent increase caps that are well below the change in CPI.

        1. Having evaluated the smaller scale apartment building investment market in SF for many years, its typically not efficient use of capital for various reasons, unless you want to be owner occupier in one unit, and rent out the other units for bonus income.

        2. Clearly if you want to enter a speculative market then learning about risks is highly desirable.

          No landlords complained when housing prices increased an order of magnitude or more in the last 30 years — beating handily any other asset class except for tech stocks. You know, maybe that was the time to deliver rental unit improvements. SF landlords do NOT have a reputation of unit upkeep let alone upgrades. This city is infamous for multi roommate subletting, leaky windows, no heat, and seismic retrofits that had to be forced by law. Not much has changed here post-pandemic, even if rents are slightly down.

          In short: you can’t just be in the capitalism game to reap rewards from squeezing fellow humans.

          1. I am defiantly not a no-regulation-free market guy. Homes need to be habitable. The unit should not leak, the toilets should flush the hot water should be hot things of that nature need to happen, end of story. There are no qualifiers when it comes to habitability. However, cosmetic upgrades or quality-of-life upgrades are often not done because the market doesn’t demand them. Competition (more supply) would drive landlords to compete. That is the problem with our current environment. No one on the left believes or, more often, understands the power of the free market, and no one on the right understands the need for sensible regulations.

  4. Maybe the Hilton Union Square and Parc 55 could be converted to rental housing putting downward pressure on rents? The owner of SF’s largest and 4th largest hotels announced today they are walking away from the loans on those properties allowing the banks to take them. Citing no expected improvement in SF tourism through 2027 it’s unlikely the bank will find someone willing to keep them as hotels. An opportunity to convert them to residential use? Easier to do than with an empty office building.

    1. It would be financially disastrous for the city to allow more than a very small number of conversions of hotels to residential use (although I agree with you that it would be easier than conversion of office space from the construction perspective) because that would mean losing out on the transient occupancy taxes and tourism improvement district assessments that hotel rooms generate.

    2. A hotel is “residential use” … albeit transient residential. I don’t believe anythng at all – other than a great deal of….courage ?? inanity ?? – is necessary to consider them the world’s priciest SRO’s.

      1. But getting less pricey – “the two downtown San Francisco hotels were valued at a combined $1.56 billion in an appraisal at the time of the loan underwriting in 2016, according to a CMBS industry report on the loan for bond investors. Should Park surrender the hotels to the lender on the basis of the $725 million loan, it would represent a 53% decline from that appraised value.”

        The bank is not going to run two hotels – it will offload them. It’s likely any buyer would look for an alternate use – the current owner sees no improvement in SF tourism thru at least 2027.

        1. The bank doesn’t have to run either hotel. I agree that they will offload them. I don’t think that they will have to go for some other use. The steps would be something like:
          1. Bank takes the buildings back, and marks the assets now on their books to market, taking a sizeable loss. After some negotiating/work outs, bond investors take a big haircut.
          2. Bank turns around and sells them for the now-realized loss. New owner gets a bargain.
          3. New owner operates the building(s) as hotels, but with a significantly lower rack rate, which is only viable because they got the building at such a discount.
          The new owner doesn’t have to depend on some macro-level improvement in local tourism in the next three or four years, they can get by taking business away from other higher-priced hotels until things turn around.

          1. In a perfect world, the bond investors and shareholders bear the sole loss on this investment. As we have seen over the recent past, we all experience the pain from assets marked to market, either through direct government intervention or through higher interest rates and lessened credit availability (although I personally think this a good result.)

          2. 1. Bank takes the buildings back, and marks the assets now on their books to market, taking a sizeable loss. After some negotiating/work outs, bond investors take a big haircut.
            The bank takes the loss, Period. Portfolio losses don’t get assigned to specific parties. Unless this is some kind of limited partnership the bank went in on, they’re aren’t any bondholders to take a haircut.
            As for the hotels themselves, there’s no indication they plan to stop operating as such. OTC, as noted, with a lower cost basis they’ll be in an excellent position to compete; it’s other, less desirable places that may find trouble coming their way.

          3. Notcom, you’re assuming that the bank has the entire loan on their books, which is true sometimes.

            I was trying to cover the other cases where the bank took that loan, slammed it into a package of other similar loans, securitized the result and then sold the whole thing off as commercial mortgage-backed securities. They would still have to take a loss on the tranche or tranches they had on their books (they’re required to keep the so-called “equity tranche”) which, as I understand it, usually would be in the first loss position.

          4. The non-recourse, commercial mortgage-backed security loan is with Wells Fargo and was originally underwritten by JP Morgan Chase in 2016, according to the Real Deal.

            Was the description in SFGate this morning. But, honestly we’re getting a little – or more than a little – ahead of ourselves: at this point someone has stopped payments on a loan…seeing this as the first domino in the fall of Western Civilization seems like rushing things.

          5. Notcom, it’s a big deal because of what it portends for commercial real estate. The mortgagor is the operator of the single largest hotel in San Francisco, in terms of hotel rooms, and has (or at least had) access to the most favorable loan terms. If this is how it’s going for them, other operators are going to presumably have it worse in the coming years, when their loans come due.

            Also, I believe commercial “real estate people” are incredibly prone to groupthink, herd behavior and momentum investing. The fact that a billion dollar company decided to do an immediate strategic default on its loan is going to make other operators seriously consider doing the same thing.

            Certainly not the first domino in the fall of Western Civilization, but it’s the next domino to fall after the sale of 550 California St. for over 60 percent less than what Wells Fargo paid for the 13-story building in 2005. When values decrease, tax revenues do as well, which has a negative impact on the city’s budget, which in turn reduces the ability of The City to provide the services to ameliorate the “street conditions” that people like Park Hotels CEO Thomas J. Baltimore Jr. identify as one of the motivators behind their actions.

          6. I’ve no trouble understanding this is a “big deal” (I think you’ll find I’ve been a persistent pin-pricker to the bubbleheads that slum in these parts) It’s not absurd – at least by some simple models – to say the CRE market in DTSF is overvalued by multiples – two? three? four? – and will have to adjust accordingly. But…

            For all those who see Detroit West abuilding – if that’s the right word – it’s probably best to err on the side of caution: however plain “the facts” may seem, remember that Detroit, Camden and Indianola are the exceptions, not the rule.

          1. Isn’t the distinction between the hotel operator and the building owner kinda irrelevant to the situation at hand?

            What’s important is that Park Hotels and Resorts, the Virginia-based real estate investment firm, has intentionally stopped making payments on their loan for the two hotels and as a result of that, the buildings are going to at some point change hands on distressed terms — which will in turn force a hair cut on the pension funds and other institutional investors who own the CMBS.

          2. Perhaps….as there seem to be a couple of points being offered:

            (1) The first that someone overpaid for the property, and that CRE is overvalued in DTSF. I believe that point is quite true

            (2) The second was that Hilton was giving up on the market. I don’t believe this point is correct at all, or at least this particular sale doesn’t indicate it since it’s not Hilton that’s doing something. We may well find out the city…excuse me, the City is overburdened with hotel space just as it seems to be with office space, but they’re not completely overlapping markets. Tourism, tho still down a lot – i.e. worryingly – from pre Pandemic is nevertheless doing better than office occupancy.

    3. Residential conversions is typically more for obsolete hotels that can’t compete with newer hotels.

      But Hilton is basically saying there isn’t going to be enough downtown SF business travel and convention activity to sustain its business model for next 3 years.

      1. What Hilton isn’t saying, but I think is a key aspect of the story here, is that Park Hotels has a loan covering both buildings that is maturing later this year. When/if they attempt to refinance that loan, the current cash flow from the hotels isn’t going to cover the much, much higher payments on a new loan at today’s higher interest rates.

        Since they don’t have the cash on hand to pay off the loan, they’re defaulting and handing both buildings back to the loan servicer.

  5. A large wave of evictions is about to start now that the eviction moratorium on unpaid rent has expired (The CDC ended the COVID emergency proclamation on May 11th 2023). Across the hall, I see eviction papers for someone who hasn’t been paying rent since at least July 2022. I wonder how much lower rents will be in 3 months time.

  6. Just make a law that all new leases signed after 1/1/2024 are not subject to rent control. Extensions of pre-2024 leases would be subject to the old rules. Nobody gets kicked out but over time, the rental situation in the city will normalize.

  7. A bit late to the conversation here, just came across it. One of the elements of the rent control regulations in SF is that rent hike itself, independent of the allowable percentage, can only be 60% of the CPI. Time to rein in the Rent Board.

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