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San Francisco Apartment Rents Crater Up To 31%, Most in US (bloomberg.com) 141

Posted by msmash from the how-about-that dept.
San Francisco's sky-high apartment rents are falling fast. From a report: The median monthly rate for a studio in the city tumbled 31% in September from a year earlier to $2,285, compared with a 0.5% decline nationally, according to data released Tuesday by Realtor.com. One-bedroom rents in San Francisco fell 24% and two-bedrooms were down 21%, to $2,873 and $3,931 a month, respectively. The figures underscore how the pandemic has roiled property markets and changed renter preferences. With companies allowing employees to work from home, people have fled cramped and costly urban areas in droves, seeking extra room in the suburbs or cheaper cities. Tech firms, in particular, have told staff they should expect to work remotely well into next year -- and may be able to do so permanently. "Renters are likely heading to more-affordable areas where they can get more space at a cheaper price," Danielle Hale, Realtor.com's chief economist, said in a statement. "The future of rents in many of these cities will depend on whether companies require employees to work from the office or continue to allow remote work."
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San Francisco Apartment Rents Crater Up To 31%, Most in US More

San Francisco Apartment Rents Crater Up To 31%, Most in US

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  • Seattle (Score:5, Informative)

    by darkain ( 749283 ) on Friday October 16, 2020 @05:55PM (#60616764) Homepage

    I've been monitoring the rental market here in Seattle, and we've been seeing the same sharp declines. Its been awesome!

    • It's not rocket surgery (Score:4, Informative)

      by bob8766 ( 1075053 ) on Friday October 16, 2020 @10:04PM (#60617368)
      It should drop significantly in places with a lot of software developers. The value of living close to work went down quite a bit after we discovered we can be just as productive on the couch in our underwear somewhere in the burbs.
  • ... thought that "Rents" was a verb and "Crater" was a noun and thought WTF?

  • Market correction (Score:5, Insightful)

    by yassa2020 ( 6703044 ) on Friday October 16, 2020 @06:04PM (#60616796)
    So messed up how it's written in the tone of "oh the poor landlords ... we must force rents to stay high!"

    • Re:Market correction (Score:5, Insightful)

      by WankerWeasel ( 875277 ) on Friday October 16, 2020 @06:40PM (#60616902)
      Certainly depends on the situation. Friend owns a number of rental properties (half dozen duplexes) in our area and rents them out at very reasonable rates. His mom lives in one, and 4 other friends of ours live at various ones too. Drop in rent prices will make it hard for him to pay his mortgages, which may mean he sells. When local landlords move out of the market, large rent management companies come in and have more ability to raise rents in the area. In the end, it hurts renters and locals.

      • Drop in rent prices will make it hard for him to pay his mortgages, which may mean he sells.

        If he's renting out properties at reasonable rates, then he's not going to have to lower rents. His rents are already lower than the prior market average. If he sells for what the market will bear, then he will make more housing available. It's a win for everyone but him.

        • Yah no,
          does not work this way. I happen to know, I buy places from guys like him.
          I come around looking for these, I make an exceptionally good offer. I buy
          properties that have been reasonable for years and with bad to decent landlords.

          Then I come in, vacate a unit, fix it up so that there is no issues, bring it to market
          at full value, rent it and keep on doing the same till it's complete.

          take a D- to C- rate building and make it into a B+ .
          every unit get's wired for cable and fiber connection. has a little

      • Re: (Score:2)

        by idji ( 984038 )
        rampant capitalism leads to monopolies which leads to price gouging - invented by Rockefeller himself.

        • History has shown that Rockefeller was able to bring the price of oil down from $200.00
          a barrel to $2.00 a barrel before the trust busting.

          He brought efficiencies to the market, quality control, and overall made it better. You even
          looking back on all he did, there is not enough negative aspect's of his actions to warrant
          the negative perceptions. he was able only to control 21% of the oil market and refining
          market before trust busting happened.

          • Re: (Score:2)

            by hawk ( 1151 )

            A couple of decades ago, some economists actually reviewed the *data*, rather than simply repeating the story that he came into town, lowered prices, drove off the competition, and then raised prices.

            It turned out that the first three parts were true, and that the fourth simply didn't happen. He was so much more efficient (whether ue to economies of scale or otherwise) that he was *profitable* at the prices that drove others under.

            In other words, a major win for the consumer.

            Economists now understand that

      • Re: (Score:2)

        by AmiMoJo ( 196126 )

        Ideally people should be able to get mortgages to buy those properties off him. The mortgage will be lower than the rent for obvious reasons. Problem is they need a large deposit which is hard to save up when you are paying high rents every month.

        In the UK pensions are shit now so many people are trying to become landlords to pay for their retirement. Even people who own homes see them as an asset, planning to downsize and pocket the cash to supplement their meagre pensions. It's a nasty situation, somebody

      • Re:Market correction (Score:4, Insightful)

        by WierdUncle ( 6807634 ) on Saturday October 17, 2020 @04:30AM (#60618004)

        Drop in rent prices will make it hard for him to pay his mortgages ,,,

        I believe this is an example of excessive leverage, where assets are bought with borrowed money, on the assumption that the asset will generate income, or increase in value, in order to cover the costs of borrowing. In the general field of speculative finance, excessive leverage is known to increase risks, so a small downturn becomes a disaster. This is what clobbered Lehman Brothers.

        Though banks are now required to have sufficient capital to weather financial storms, it does appear that high leverage is still the norm in the case of property. The fact is, property prices are so high that very few people are able to buy property without substantial borrowing.

  • Refugees (Score:4, Informative)

    by mspohr ( 589790 ) on Friday October 16, 2020 @06:12PM (#60616822)

    I have a small office building at Lake Tahoe. It's now full of refugees from SF. People love to live and work in a place with good access to nature.

  • No Point (Score:4, Interesting)

    by Jarwulf ( 530523 ) on Friday October 16, 2020 @06:25PM (#60616864)
    Places like SF haven't been good places to live in decades. The only thing driving the market to live there is inertia and hipsterism. Companies go there simply because other companies were there and the bosses are hipsters who want to look cool. Hipsters want to live out some fantasy of fast paced city life they saw on tv based on a place that never really existed especially not in the poopsoaked streets of today.
    • It's clearly not those things driving the demand. The demand is for places near work, that they don't have to spend 2+ hours driving each way. Now with most working from home, that demand to be close to an office is no longer there. We're seeing it in major cities across the country. The other piece of downtown living has been having lots of bars and restaurants nearby too. With so many of them closed or only offering takeout, and people less willing to spend time at such establishments, it further lowers d

      • If the demand is for places near work, then why does it not occur to seemingly any company to move work to a smaller city?

        Are all the C-level execs raging extroverts who literally can't function in a city of less than a million? Or as the parent post was guessing, are they all narcissistic hipsters who need to preen in front of their supposed equals?

        • Are all the C-level execs raging extroverts who literally can't function in a city of less than a million?

          The only time they get out the city and touch with that environment that they claim to covet is when jackson holes jet ramp is full of the same filth.
        • Because small town means small talent pool. People don't pick up and move to the town, they just get a different job in the big city. Because it's not just about being close to your current job, but also being close to other jobs so that you're nkt locked in to your current one.

          The thing about big metro areas (like New York etc.) is that most people hate their tiny High Rise apartments. They put up with it because they don't really spend much time there other than to sleep.

      • It's clearly not those things driving the demand. The demand is for places near work, that they don't have to spend 2+ hours driving each way.

        No. Most of my friends who live in SF work in Silicon Valley - down the peninsula.

        They live in SF to be close to play, they commute to work. They actually like SF and the lifestyle that comes with living there. Of course, now that all the clubs/bars/theaters/parties/etc are closed... who knows what will happen.

        • Lets see if he old guard move and actually sell their properties and allow an economic and thought diversity that SF has not had since the early 80s. The tech guard are already gone to exburbs and something new will develop in the city and at first they certainly will not be as wealthy. If old stale liberals who are the bigest NIMBYs move on perhaps the real estate market will normalize, and some redevelopment can happen.

    • Most of the benefits of living in SF have been removed, making it merely an over-priced city.

      The city is in shutdown, you can't do any of the things that made SF special, and now that you are both working from home (roommate, partner, spouse, whatever), you need more room to handle multiple simultaneous zoom calls - that's tough in a cramped, single bedroom apt.

      The new reality (for now, anyway) erases the reasons people were willing to live in the first US city with professional human poop removers.

    • You go to SF for the VCs & talent, not the loo (Score:4, Informative)

      by Somervillain ( 4719341 ) on Friday October 16, 2020 @09:00PM (#60617250)

      Places like SF haven't been good places to live in decades. The only thing driving the market to live there is inertia and hipsterism. Companies go there simply because other companies were there and the bosses are hipsters who want to look cool. Hipsters want to live out some fantasy of fast paced city life they saw on tv based on a place that never really existed especially not in the poopsoaked streets of today.

      Sorry, buddy, you're ill-informed. They don't move there to look cool. They go there because that's where the talent is and the VCs are and where you can find the best engineers, on average. Every service a tech company can need from lawyers, caterers, to specialty office buildings and furniture companies thrive there. Sure...you "could" setup in St Louis, Detroit, or whatever city with an airport is much cheaper, but then you'll find it harder to network, get investors, hire people, etc. Most tech companies with headquarters outside of SV/SF have at least one office there....why?...because we need the talent.

      In a better world, yeah, you could just pay someone a little more and have them relocate to an office in the middle of nowhere where rent is cheaper...say the rural midwest, but only an idiot would take a job out there, knowing that once you move, your probability of finding another job out there lowers drastically. I know many non-tech companies that are located in the middle of nowhere and have HUGE difficulties finding tech talent, even when they paid the same salary the talent would get in SV.

      Tech companies are sociopaths. They only do business in the bay area because it's good for business. If they could relocate to some rural town and save money, they would. Hell, if they could, they'd relocate to the poorest country in the 3rd world, preferably a coastal paradise where top talent can live in a resort-like atmosphere. They'd brag about how innovative they are for doing so. The only reason every job in SV isn't in Bangalore is because they couldn't do it profitably enough. Believe me, they tried and tried hard, and failed!!!

      The cost of losing top talent, networking opportunities and easy access to VC outweighs the insane real estate costs. Maybe COVID will change this slightly, but I doubt SV/SF will really be that much different in 5 years.

      • Re: (Score:2)

        by k6mfw ( 1182893 )

        In a better world, yeah, you could just pay someone a little more and have them relocate to an office in the middle of nowhere where rent is cheaper...say the rural midwest

        I heard Spaceport America in Nowhere, NM has a beautiful air/spaceport but it's no boomtown like Cape Canaveral. Main reason there's nothing there but the spaceport unless you are a rock climbing or desert rat specialist.

        • I heard Spaceport America in Nowhere, NM has a beautiful air/spaceport but it's no boomtown like Cape Canaveral. Main reason there's nothing there but the spaceport unless you are a rock climbing or desert rat specialist.

          There's plenty there if you like green chile and drunk driving.

          Note to Texans: your chilli sucks compared to NM.

      • something I enjoyed saying in another post,
        the reason SF, Seattle, LA, NYC and maybe others is because that's where the action is.

        LA, film based venture capital, deep entertainment talent
        SF, software and hardware venture capital and deep code talent
        Seattle, deep code talent and hardware talent
        NYC, money talent and venture capital
        Hong Kong and London, Insurance talent and deep risk pool

        AS you mentioned, where the talent is, so will be the extra cost of living. so to define this clearly,
        their are a lot of gr

  • The pipe dream had to end at some point (Score:4, Interesting)

    by CaptnCrud ( 938493 ) on Friday October 16, 2020 @06:55PM (#60616930)

    NY has an even worse problem, they are willing to keep spaces empty "for years" if they don't get the extortion level price they are looking for. Some of these big cities deserve to have the reset button pressed and come back to reality.

    • Re:The pipe dream had to end at some point (Score:5, Insightful)

      by thegarbz ( 1787294 ) on Saturday October 17, 2020 @04:39AM (#60618026)

      Some of these big cities deserve to have the reset button pressed and come back to reality.

      Reality is nothing more than supply and demand. Your idea of "reset" is little more than making a place less desirable to live through an extreme and sudden means. That isn't the best plan for a wealthy city.

      if they don't get the extortion level price they are looking for

      That's also a supply and demand situation. If they are being undercut they won't get tenants. It's not extortion to not want to pay someone what *they* think their shit is worth. This is the very literal case of people simply voting with their wallet, the exact opposite of extortion.

      • Reality is nothing more than supply and demand.

        But in this case distorted by regulation. The reason these large property owners are willing to let a storefront be vacant unless $highrent is because when vacant, its a write-off against the taxes on the profits of those storefronts that are rented. Further, this artificial upward pressure on rents also has upward pressure on land value itself, and thus the property taxes go up too, leading to even more upward distortion of rents.

        Its all fun and games until government gets involved.

        • Indeed, but the distortion doesn't disappear just because the supply and demand curve changes. You can address that head one without an aggressive jolt to the housing economy.

  • Not a pandemic problem (Score:2, Interesting)

    by guruevi ( 827432 )

    The pandemic has hit everywhere, yet the drops are only in Seattle, LA, SF, NYC and similar cities. Suspiciously these same cities are allowing crime to run rampant and let their cities burn. LA didnâ(TM)t learn from the Rodney King riots incited and handled the same way by the same parties.

    Cuomo and Newsome are begging the rich not to leave and keep paying taxes while entire companies are picking up their entire companies, employees and all and moving out of state, Joe Rogan, Elon Musk and others all

    • Re:Not a pandemic problem (Score:4, Informative)

      by Junta ( 36770 ) on Friday October 16, 2020 @08:05PM (#60617126)

      I mean, a straightforward explanation is that those are extreme metropolitan areas that only have value for proximity to amenities and jobs, predominantly office jobs. And most other areas aren't any less expensive to live than others, so most people don't see a reason to go running from where they live in search of lower rents/prices.

      Now most of those amenities are closed or severely curtailed and the office jobs are as accessible from many miles away as they are from those cities. The value-add of living in those cities is now merely the potential future of those things coming back, and that may be many many months away still. If making living decisions based on what you can get *now*, the cities no longer hold significant allure.

      • Now most of those amenities are closed or severely curtailed

        No they aren't. Everything's been open since 4th of July (despite never meeting the metrics for reopening, they just caved to political pressure like they said they wouldn't).

        Businesses are only doing poorly because everyone is afraid to go out and they've been waiting 7 months for relief to come from the federal government.

        OP:

        People are leaving, not because of a pandemic, but poor leadership.

        Totally agree

        The pandemic has hit everywhere, yet the drops are only in Seattle, LA, SF, NYC and similar cities. Suspiciously these same cities that had massively inflated housing prices

        FTFY. I live in DTLA. There's no crime.

    • Re:Not a pandemic problem (Score:4, Informative)

      by ljw1004 ( 764174 ) on Friday October 16, 2020 @09:49PM (#60617340)

      The pandemic has hit everywhere, yet the drops are only in Seattle, LA, SF, NYC and similar cities. Suspiciously these same cities are allowing crime to run rampant and let their cities burn.

      I live in Seattle, 8 blocks away from the "Capitol Hill Autonomous Zone". There's no burning, and crime here remains at the same level it was last year, though police response times are a touch better than they were in 2019 or 2018. This is all according to the Seattle police department's public dataset https://data.seattle.gov/Publi... [seattle.gov]

      The data for Seattle doesn't show the correlation you claimed.

    • Re: (Score:2, Flamebait)

      by Frank Burly ( 4247955 )

      Do you get your "big city" knowledge from Fox News? I haven't seen crime running rampant in Los Angeles, certainly nowhere near the crime rate in the years immediately before or after the 1992 riots--California had a Republican Governor at the time. Los Angeles and "similar cities" are crowded and expensive. Moving away makes perfect sense for people who don't want to deal with that, or who have the money and temperament to go off the cultural grid.

      Say what you will about that turn of phrase, but my guess

    • Re: (Score:2)

      by sjames ( 1099 )

      Alternatively, the big drops are happening first where renters are desperate enough for a better deal that they're willing to tackle moving during COVID. Naturally, that means the most expensive/overpriced locations.

      Moving to get 10% lower rent, maybe next time. Moving to get 60% lower rent, YES PLEASE!

  • What a blessing (Score:5, Interesting)

    by skam240 ( 789197 ) on Friday October 16, 2020 @08:29PM (#60617198)

    What a blessing this is for the city and the region. I've been a Northern Californian for pretty much my whole life and I have not enjoyed the city San Francisco has become. Not only is there the issue of homelessness and the surrounding issues that this helps resolve but it helps with a major cultural issue I've had with the city for a number of years now. Going down to the city used to be fun for me, I had friends who lived there and the general social scene was colorful. For the last half decade or more though no friends of mine could afford the city and the social scene was awash with bland yuppies.

    This will also likely help with the rising cost of living in my own region in the North Bay.

  • In addition, a second factor (Score:3)

    by Applehu Akbar ( 2968043 ) on Friday October 16, 2020 @10:28PM (#60617414)

    Not only are employees freeing up apartment space by working remotely, but employers can now occupy smaller offices. Watch for conversions of office space into residential, just as we have seen conversions of sturdy old industrial buildings to other uses. Renovators are going to have to figure out how to transform open plan offices into great rooms, executive corner offices into master suites, and figure out what to do with a bathroom that has six urinals and ten stalls.

    Finally, your new condo will have an electrical system that can handle any home server installation you can imagine, plus gigabit broadband.

  • At over $500/week for a zero-bedroom dog-box, I'm picturing Crater Lake in Oregon.

    Surface elevation 6,178 ft , so lower than nearby peaks, bit still high as fuck.

  • Bargins! (Score:3)

    by nagora ( 177841 ) on Saturday October 17, 2020 @03:46AM (#60617898)

    $2800 a month for a single-bed flat? Wow. I'll have three!

    Landlords (and banks) are still making a fortune while everyone else has to make do on fumes and hope.

  • Flattening the wrong curve (Score:3)

    by istartedi ( 132515 ) on Saturday October 17, 2020 @03:57AM (#60617930) Journal

    It used to be that people could find pockets of affordability in California. Now the high rent people are flowing out and the spread between Bay Area rents and exurb rents if less extreme. I'm quite exurban and own, so I wasn't very aware of what was going on with rentals; but they were complaining about it on the radio today. They're saying it's going to make our existing homeless problems worse--yes, there are rural homeless. This could even cause more wildfires if some of them decide to squat in flammable areas. That's already a problem in San Jose, but in SJ the fire response is fast and the flames have a good chance of being stopped by concrete. No such luck in most of rural NorCal, and despite this year's lightning fiasco, most fires are started by people.

    So. By failing to flatten the Covid curve, we've flattened the price curve geographically and it's really not good on so many fronts...

  • Wealthy people escaping the plague (Score:3)

    by WierdUncle ( 6807634 ) on Saturday October 17, 2020 @04:49AM (#60618044)

    In the UK, I have read of some kind of exodus from cities, towards country properties. The fact is, the concentrated living conditions in cities make virus transmission much more likely. I live in Birmingham, which is a virus hotspot, subject to additional restrictions. My sister lives in a village in Herefordshire. No problems there. Continuing working from home makes rural living quite practical for many people.

    Of course, there is the problem of the availability of properties in the country. An exodus of wealthy people from cities to rural areas will drive up prices. While this would benefit people who already own property in rural areas, it makes it difficult for locals to buy property, which might mean younger people leaving small towns and villages, because they cannot afford to live there. This already happens in tourist areas with a large number of holiday homes.

    • The volume of land outside of cities means the increased demand will have minimal effect, unless of course that exodus isnt really an exodus but instead a migration to another specific area.

      • The volume of land outside of cities means the increased demand will have minimal effect, unless of course that exodus isnt really an exodus but instead a migration to another specific area.

        It is not just the volume of land, it is the availability of houses that are ready for people to live in. I suspect this is much more of a problem in the UK than it is in the USA, just due to geography. There seems to be a tendency for housing property developers in the UK to acquire land, but not fill it with houses right away, as that would depress house prices.

      • Problem with the Irish and UK exburbs is land is neither cheap nor plentyful, it goes for the same rates as the island of manhattan. It is in deeds that cannot be moved in any sort of liquid manner. Those grazing lands everywhere are swiss accounts for the 1% and who you think is the landowner keeping sheep is the person renting at what the property is taxed at as a phyiscal manifestation of a deposit by someone else.


        Texas and Florida was divided into plots on the other hand that are liquid and any
  • Those poor real estate investors. Is the government bailing them out? Wouldn't it be ironic if they ended up living in a tent in front of the building they used to own? Then the police sweep them away.
    • Most of the owners that are development blockers for low cost or high cost housing have owned in california for decades. The peasant who parents bought the parcel for $400 bucks in 1953 is much more trouble to moving a neighborhood forward than someone who bought a property for 1.2 million 3 years ago. The peasant entire net worth is wrapped up in a birthright in a zipcode that could be on the rise or on the fall is trouble, the investor can have the property sold by the end of the week for the actual m

  • when rents are ridiculously high sdomeday it's got to get back to reality and come down. Yearly paying 27000 dollars for something that aint your's dont make any kind of sense. that means that you need at least 100k a year to make ends meet .. bare bones minimum .. tell that to the store clerk ..

    • When property taxes and land values are ridiculously high, renting makes perfect sense.

      The benefits of buying your own in these environments are eradicated by the combined might of property taxes and opportunity cost, and thats assuming that you dont also have a mortgage to pay interest on.

      Even at the laughably low price of $500000 for the property, the $27000 you are talking about is 5.4% .. why cant you get more than 5.4% elsewhere?

  • The main factor driving up SF rents was affluent tech workers choosing SF over silicon valley. Why? Because they were young and liked the night life.

    Covid = no night life, so why pay through the nose for something that you are not actually getting?

    Meanwhile, the consequences of SF politics are driving out families with deeper roots, adding icing to the cake.

    • This goes on for another 18 months there is nobody left in their early twenties who knows what a night life is. Zoom after 10pm == Nightlife.
  • Most people live near work and hence in built up city areas because of transit times. Yes the cheaper cost of housing in areas further away might have a lot to do with the move out of the city, but I would wager that a lot of it is due to no longer having to travel to work. On the plus side for those whining about crappy bandwidth out in the countryside the move out of the cities and the demand for decent bandwidth in barns across the country will mean they finally might get better internet connections.

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