San Francisco Chronicle Tuesday January 5, 2021 1:54PM |BIZ+TECH|”These charts show just how extreme the rent declines in San Francisco were in 2020” By Kellie Hwang
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Summary of Article
“Pedestrians walk past a ‘For Rent’ sign in a doorway on Hayes Street in San Francisco (SF) on Friday, October 9, 2020. San Francisco’s falling sales taxes and other data like declining apartment rents and busy movers strongly suggest the city’s population is shrinking after four decades of growth.”
With the onset of the pandemic in March few people were moving “across the country”, more people started working from home and jobs losses kicked in. “…people started leaving pricey big metro areas in favor of more affordable cities.” SF “the country’s most expensive big city” saw rents drop nearly 27% by October.
Across the country, median one-bedroom rents range from a low of about $600 in Wichita to $2700 in SF and since March the rents rose as much as 5% in the more affordable cities but declined as much as 27% in SF. The average increase in suburban cites was 0.5% and average decline in those larger cities with the “greatest economic output” fell by an average of “9.3% since January.” From December ’19 to December ’20 SF fell 27%, California 5.2% and 1.5% for USA overall. SF vacancy according to Apartment List increased to 12% by August up from 5% before the pandemic. This trend played out in other cities including Seattle, San Jose, New York and Boston while vacancies declined and prices rose in suburban cities including Albuquerque, Boise, Chesapeake and Fresno. Seasonal declines likely account for less than 0.5%.
Analyst Neil Gerstein (Zumper) suggests that going forward rent declines “might be in the 0% to 2% range rather than 3 to 5% range…”. This slowing of rate declines may reflect an influx by bargain-hunters with the median falling to $2600 (1BD) from a previous low of $3270 (February 2017). In the bay area SF still leads the way on price followed by Milpitas ($2630) and Cupertino ($2510) contrasted by the lowest being Vallejo ($1390), Concord ($1700) and Richmond ($1740). YOY rent changes increased in Milpitas nearly 11%, Union City 2% and Livermore 1% with all other bay area locales with declines of 24% in SF, Menlo Park, Mountain View, Santa Clara and 23% decline in Redwood City and 22% in Oakland. 15 of the 28 listed bay area cities in all experience double digit declines.
Gerstein comments further “Just because people will be working remotely does not mean they won’t demand the amenities of city life.” Having said that “he thinks rents will stay lower for the next few months.”
