While the weighted average asking rent for an apartment in San Francisco proper has been holding firm at around $3,600 a month since mid-March, it’s now down nearly 4 percent on a year-over-year basis, representing the first year-over-year drop in asking rents in two years.

As such, the weighted average asking rent in San Francisco is still 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 currently holding at around $3,000 per month, which is now 3 percent lower 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 is now running 30 percent higher than at the same time last year, with nearly 40 percent more studios and one-bedrooms on the market, with local employment trending down and the cost of capital having jumped, none of which should catch any plugged-in readers by surprise.

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.

20 thoughts on “Average Asking Rent in San Francisco Just Dropped YOY”
  1. I’d love to see the average price of a one bedroom settle around $2,500. It’s arbitrary, but that feels like a nice number that both is slightly more affordable to people, while still showing SF as a successful city with high desirability and jobs.

    1. A return to $2,500 would effectively erase a decade of rental inflation, reducing pro forma returns, which are currently down nearly 20 percent from peak, by another 17 percent, while the cost of debt is roughly 75 percent higher today than it was a decade ago.

      1. SocketSite is correct, in numbers, but a reduction in rent will produce a social good, opportunities for people with smaller incomes to live in San Francisco. Why should rent here be higher than Paris and equal or greater than London or New York?

        I doubt that there is a direct correlation, but perhaps a fall in rents will contribute to a greater supply of housing for the poor and homeless. Perhaps the City can then have less onerous rent control laws, especially if the so-called “moderates” (strong liberals in any other city) regain control over the Board of Supervisors, encouraging developers to build more housing and convert more offices to residences. The obvious downside is that rental properties will be less valuable.

        1. The French capital is MUCH more densely populated than S.F. (although I’d guess the number of flippers, developers and hangers-on in the real estate “game” is lower), has many more mid-rise buildings packed tightly together (and much better public transit infrastructure) so it should not be surprising that rents here are higher.

          The final sentence here seems to me to be the most insightful. If rents were to decline to a level effectively wiping out a decade’s worth of rental price increases, property prices would have to decline to a substantially lower level.

          1. I’m thinking that comparisons with Paris – or NYC or wherever – are really comments about the intrinsic value of living there, more than about the mechanics of the pricing mechanism(s).
            Let’s see:
            Eiffel Tower vs. Sutro Tower
            Le Louvre vs. the DeYoung
            Victor Hugo vs. Amistead Maupin
            Folies Bergère vs. The Ramrod
            Hmmmm…. While San Francisco may be called the “Paris of the Pacific”, the latter is unlikely to be “San Francisco on the Seine”…n’est-pas??

          2. Brahma is correct that Paris is more densely populated per square mile, but it has a much bigger national, European, and international image, and consequent demand. On a naive supply/demand model, Paris should be more expensive, as it usually has been over the past 50 years. My impression is that SF rent is “overpriced” compared to Paris and the reasons are not obvious, although it may be partially the result of their rent control. Paris apartments for sale are more expensive than SF at least in the central and western arrondissements (1er-9e, 15-17e.)
            Notcom is right! Sutro Tower cannot compare to the Eiffel Tower, and Sutro has no Champs de Mars. That is why so many San Franciscans have residences secondaires in Paris and so few Parisians have places here. Parisians prefer the south of France, of course.

        2. A much more relevant comparison would not be Paris buy say Toulouse or Lyon. Which actually are fairly equivalent mid sized regional cities like SF. Then the truly out of whack asking rentals for SF become much more glaring.

          And using the historic 4% per annum nominal change in rentals in SF over the last 5 decades (based on direct experience since the 1980’s) the reversion to mean nominal rent for a 1 bed would be much closer to $1600 not $2500. $2500 would a be high end reversion to mean rent for a 2 bed.

          Rents will follow more of a post 2000 rather than a post 2008 decline. Still a long way to go. Most landlords have yet get beyond the denial stage and start moving on to the capitulation stage. Those who remember both the early 1990’s rental crash as well as the post 2000 rental crash will know what I mean. Took two or three years for reality to sink in. Then it took about 15 years to get back to the 2000 nominal rents. For typical SF rentals not the far less common managed multi-unit buildings. A relatively small part of the SF rental market.

      2. The cost of debt is quite a bit higher, but surely most landlords refinanced when rates were at their historic lows just a couple years ago (if they followed Socketsite…).

        The cost of debt is certainly very relevant for properties bought and sold today. For ones that are held and rented, not so much.

        1. That’s all true. At some point, more of those landlords are going to try to sell the properties that they re-financed when rates were at historic lows and rented (like that condo unit at 1075 Market St. with “a long-term, high-quality tenant is already in place, ensuring stable rental income” that is still on the market about two months later) and they won’t be able to just hold until rates go down significantly. They’ll find out that due to much higher cost of debt, there are very few buyers available, and that is when the drama begins.

  2. More affordable rents = more diverse residents = more interesting, entertaining, fascinating, dynamic city = win, win win (except for boomer landlords who may have to give up 5% of the wealth they’ve hoarded over the decades)

      1. Poor and hard-working boomers were able to afford property in SF, and they pulled up the ladder behind them after they got theirs.

        Just one example of the hoarding of wealth and the “I got mine now F off” boomer mentality: PPP loans forgiven (benefiting primarily older Americans) while $10k student loan forgiveness went all the way to the Supreme Court and was killed. We could go on ad infinitum. But boomers had everything handed to them and then blame the “lazy” millennials who have to work 2x,3x,4x+ to get the same foothold they were provided.

        1. Poor and hard-working boomers were able to afford property in SF FTFY.
          I’m guessing – perhaps wildly – that you were born >1964. It’s true that Boomers were able to secure a lot of advantages – at least politically: note all the pro-youth legislation of the 60’s/70’s (and how utterly it’s been abandoned since) – but they paid for it in other ways: the disadvantages of having to compete in a crowded field…reflected in the high(er) rates of crime, and lower(ed) rates of success in that same period.
          But why treat this as an inter-generational issue ?? Isn’t it really the same old-interclass issue?? Oh, sure, the Journal loves to babble on endlessly about how the gifted-few are constantly in flux, but that’s to no small extent b/c daddy dies, and junior inherits.

          1. The “disadvantages” the Baby Boomers supposedly had “having to compete in a crowded field” amounts to nothing compared to what younger Gen X and especially Gen Y, or Millennials have to deal with today.

            In case you never read Thomas (born in 1953; i.e., a Boomer) Friedman’s bestselling 2005 book The World Is Flat, or had to actively compete for an above living wage-paying job that offers benefits in the last two decades, those two generational cohorts have to compete for employment with workers all over the world (the H-1B visa program, for one example, was signed into law in 1990), and the overwhelming majority of those employment market competitors from other countries didn’t have to take on life-damaging levels of student loan debt just to get a college degree and who supply significant downward pressure on wages here. Things are even more competitive post-pandemic now that remote work makes more positions out-sourceable and off-shorable.

            Poor and hard-working boomers were able to work their way through college and take advantage of the social mobility a college education offers because they could pay tuition, fees and all of their living expenses not covered by financial aid (which in the sixties were mostly grants, not loans) with a part-time job and still graduate in four years. That feat is almost impossible now.

            The competitive field today for jobs at companies that offer reasonably middle-class salaries with a 401(k) matching, actual paid time off and room for advancement is like the field for the Los Angeles Marathon whereas what Boomers had to deal with in their day is like the random group that shows up to the starting line for a 5K Saturday Fun Run in Pismo Beach. Baby Boomers might have had to compete in a field with more similar-aged Americans in the late sixties/early seventies than their predecessors, but it’s way more crowded in the job market today.

          2. The observations, as I recall, were from readings in a Grad-Level Demographics Class back in the early 80’s… which obviously didn’t have the advantage of future data to work with (and they were only PHD’s in various disciplines, not Thomas Friedman); they were trying to explain the higher crime and unemployment rates of the late 60’s and 70’s.

            All fascinating stuff….too bad we’ll have trouble fitting it in under the topic of “4% y-on-y rent drop”.

          3. Tuition at UCLA in the sixties was $32 a semester, rents in Venice and Ocean Park cheap, fixer uppers in Pacific Palisades, $30K. You could work a year and take several months off. There was little crime in LA or SF (except maybe in the Haight). No one thought of saving for retirement until they were in their 40s. There weren’t things to buy, the vortex of consumerism hadn’t begun – yet, and this is the bad faith of the 60s generation, the idealism of the period turned into a hunger for perfectionism in things (NYT Wirecutter is the current version of this), and in perfection for one’s children, something that almost could be quantified and possessed. In parallel the push for Civil Rights gave way to Environmentalism in the 70s and all of that vanished with the presidential election of 1980. The habitus / psychological space of Gen X, Y, Mil is completely different from that of the “Boomers” (an unfortunate name for a conflicted and compromised generation) and seems like a mosaic of little concerns and anxieties and not much breathing space.

            Re Paris – Patrick Modiano, whose books cover the period discussed here, for Victor Hugo

    1. The thing that is inarguably true — for any asset — is that you only have to take a loss if you sell when the market is down.

      If boomer landlords don’t have to take a loss, then they can hold the property until death, upon which time the property will pass on to their heirs with a tax basis “stepped up” to the value at the date of the inheritance, reducing the capital gains taxes the heir has to pay, if any, adding to their dynastic wealth hoard.

  3. Meanwhile, nationally Asking Rents Are Inching Closer to Their Record High:

    The median U.S. asking rent in July was $2,038, just $16 below the record high set in August 2022…the median asking rent is near its record high because the housing market tends to be “downside sticky,” meaning prices don’t typically fall substantially even when business is slow…instead of lowering rents, many landlords offer perks like a free month’s rent or discounted parking, which tend to be less detrimental to profits.

    It goes on to say that the number of permitted residential projects in buildings with five or more units fell 33.4% year over year to 465,000 on a seasonally-adjusted basis in June, the biggest drop since 2016. So developers of multifamily housing are deliberately slowing down to reduce future supply.

  4. Not disagreeing with the data but I’m personally not seeing slowness on the ground when I visit listings in desirable areas in SF. They are going very quickly with multiple competing rental applications. One popular rental customer right now is roommate situations with multiple start-up employees all driving home rental prices into the stratosphere, which creates competing “rental offers” higher than asking. I also witnessed two situations in July where a buyer just came in and offered to purchase a rental unit (one home, one condo) due to low sales inventory (they were successful in both cases).

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