San Francisco rents on the rise
Rents are already recovering in San Francisco and could soon exceed pre-pandemic levels (iStock)
San Francisco rents have rebounded dramatically this year, according to a new report from Apartment List. In June, average rents rose 17 percent year-over-year, according to data gathered by the rental listings website. From May to June alone, rents rose by almost 3 percent.
Despite the spike, the median rent of around $ 2,300 in June 2021 is still 14 percent below what landlords got in March 2020 when one-bedroom apartments rented a median of more than $ 2,600 per month. Then came the steep decline as tenants fled the city in search of more space and cheaper apartments elsewhere, with the average low in December 2020 under $ 2,000 a month according to Apartment List data.
The rent increases can’t come soon enough, said Eric Andresen, owner of West Coast Property Management, which manages around 1,600 rental units in San Francisco. As early as April 2020, he saw apartments standing empty, and in June the vacancy rate really increased. By October, more than 20 percent of the units he managed were vacant. “Our vacancy rate before COVID was around 2 percent,” he said.
Residents who stayed in the city began inquiring about rent cuts, which he seldom granted due to the city’s strict rent control requirements, although he helped many with their applications for state and local relief funds. Even the “first month free” offers often seen in other areas are not advisable in the Bay Area, he said.
“Nobody should offer offers, deadlines, end of sentence,” he said. “Those who did it will be stung by it in the near future. The rental committee has already decided that every deduction, every free rent or even future free rent represents a reduction in the basic rent, the tenancy. “
As rent cuts and other incentives to stay in their current apartments are unlikely, many Andresen tenants have taken the opportunity in recent months to move to larger or modernized apartments. He also saw many residents drop out of roommate agreements.
“I think we see a lot of roommates transitioning from shared flat to single life,” he said.
Andresen said he believes about half of the new leases for his apartments this year are renters who are “emerging” from their previous housing situation. The other half are new tenants arriving in town as the employment situation improves and offices reopen for personal work. Renovated one-bedrooms were the most popular for both groups, he said.
The upward trend extends to other metros in the Bay Area. Oakland was still down 12 percent and San Jose was down 8 percent, which is among the largest declines in the country. But these areas have seen a recovery, and the introduction of vaccines and subsequent reopening are making the city more attractive.
According to Zumper data, one-bedroom rents in San Francisco rose 5.3 percent between May and June 2021, compared to just 2.5 percent for two-bedroom apartments. That was a bigger jump than Oakland or Santa Clara, although those areas were also improving.
“The latest data leaves no doubt that after a year of unprecedented drops, rents in the Bay Area are now rising,” said Jeff Andrews, data journalist at Zumper. “By 2021, rents in San Francisco had decreased by about 25 percent. With workers returning to the offices soon, rents are expected to continue to rise over the next year. Will the average one-bedroom return to $ 3,500? That remains to be seen and will likely depend on the extent to which tech companies adopt permanent guidelines for working from home. “
Andresen said vacancy rates in his units are currently around 10 percent and rents are still falling, but he doesn’t think it will stay that way for long. That’s partly because COVID has made privacy a much more important convenience than it used to be.
“We are gradually climbing out of the COVID hole and I think we’ll see how the market will rebound pretty quickly as we still have a significant shortage of available housing and much of what used to be shared apartments is single dwellings has become. “he said.” Demand will surpass pre-COVID levels within a year I think and rents will quickly return to levels, if not higher. “
Contact Emily Landes
