The weighted average asking rent for an apartment in San Francisco just dropped back under $3,500 a month, which is 3 percent lower than at the same time last year, 15 percent lower than prior to the pandemic and over 22 percent below its 2015-era peak of nearly $4,500 a month, with the average asking rent for a one-bedroom in San Francisco having dropped back down to around $2,900 per month, which is 2 percent lower than at the same time last year, 16 percent lower than prior to the pandemic, and 20 percent below peak.
At the same time, the number of apartments listed for rent in San Francisco is still 10 percent higher than at the same time last year and 20 percent higher than prior to the pandemic, with local employment trending down, facts that aren’t “bearish” or “pessimistic” in nature but are key to understanding and acting on the actual market trends, none of which should catch any plugged-in readers, other than the most obstinate, by surprise.
Our analysis of the rental market in San Francisco is based on over 190,000 data points going back to 2004 that we maintain, normalize and index on a monthly basis (versus relying on a few years of data or recollections). We’ll keep you posted and plugged-in.
Are asking rents accurate of the actual contracted rents? Are renters still able to negotiate lower leases like they were during Covid?
my rent has gone up as agreed to contract signed 06/21
Perhaps the “asking” relationship in leasing is similar to the “asking” relationship in buying. Or even less meaningful, given the options of free rent and other debasem….enticements.
Similar, but landlords/leasing agents don’t really have the same incentive as RE agents to advertise that something rented “over asking”. In fact they tend to avoid setting artificially low rent asking prices for a variety of reasons. My rule of thumb is that actual rents are probably above asking in a hot market, multiple tenants competing for available units. But actual rents are probably lower than asking in a cooler market and/or one with lots of supply. Landlords are loathe to lower asking price and prospective tenants have many choices and sense a lack of urgency and can look to find someone who will offer to lower rent and/or offer concessions.
I rent an apt in Soma, as a work residence. The stated rent has remained the same since 2019, but at every lease renewal post-Covid, there has been a negotiated rent concession. I have no idea if these sorts of deals find their way into the market stats.
Oh no! How will I break even renting out the $1 million 1 bedroom condo with $900 HOA I bought in the ‘East Cut’. It will probably be okay though. A prominent broker told me that the average home price in SF will be $5 million by 2024.
Some high end home sellers finding success shifting strategy to leasing.
From site The Real Deal:
Record-breaking luxury leases signed on SF’s Telegraph Hill
Newly built townhomes rent for $23K and up per month after failing to find buyers
And any day now, other high end home sellers will start attempting to produce cash from overpriced homes as fractional ownership opportunities.