Here's why San Francisco rents aren't taking off at the same pace as New York's – San Francisco Chronicle

A pedestrian looks up at a “For Rent” sign in a window on Hayes Street in San Francisco on Friday, October 9, 2020.
After edging out San Francisco as the most expensive rental market in the country in August — by just $10 per month — New York considerably widened its lead in September, according to listings website Zumper.
The median price of a one-bedroom apartment in San Francisco stayed flat from August to September, at $2,800, according to Zumper’s latest national monthly rent report. In New York, the price went up 5% to $2,950.
Year over year, New York has seen rent grow 13.5%, while prices are down 1.1% in San Francisco — which during the pandemic in 2020 had the steepest rental declines of any major U.S. city.
“At this point I think it’s clear that San Francisco rent is in a holding pattern,” said Zumper data journalist Jeff Andrews. “People are returning to New York in a way that they simply aren’t in San Francisco yet.”
One factor, he said, is San Francisco’s technology-heavy labor force: “San Francisco is a little more dependent on the tech sector than New York, and tech companies are more likely to have adopted permanent work-from-home policies, so that’s certainly a factor.”
But Andrews added that New York’s office occupancy is not much higher than San Francisco’s, so other factors are likely in play.
Among them, he said, is that New York’s rent “dropped in a way that offered a true price incentive for people to return to the city,” whereas in San Francisco, pre-pandemic rents were already so high that the rental price decline didn’t make as much of a difference.
“Rent in San Francisco is down 20% relative to pre-pandemic levels,” Andrews said. “Even with that huge drop, it’s still in the ballpark of where New York was pre-pandemic and is now.”
Another possibility is that before the pandemic, people lived in San Francisco chiefly because of its proximity to their workplace — and if they don’t need to return to the office, they have left permanently. While the same could be true for some in New York, perhaps more people want to live in the Big Apple regardless of where they work, so “rent snapped back pretty quickly,” Andrews said.
Last month was the first time since Zumper began collecting rental data in 2014 that New York’s rent surpassed San Francisco — by a very narrow $10 per month. However, San Francisco still has nearly a $400 lead over the third-most expensive market in the U.S. — Boston, where a one-bedroom apartment cost $2,410 a month in September.
Also, the median two-bedroom rent in San Francisco was still the highest in the nation at $3,900 in September, well above New York’s median two-bedroom rent of $3,150. Andrews said he couldn’t point to one factor to account for that large difference, but one possibility is that young professionals who left the city mainly lived in one-bedroom apartments and haven’t yet returned. He also said there could be a supply imbalance between one and two-bedroom units.
The Zumper San Francisco Metro Area Report analyzed active listings in September 2021 across 19 metro cities to show the most and least expensive cities and cities with the fastest growing rents. The California one bedroom median rent was $1,914 last month.
Among the major cities within its very pricey metropolitan region, San Francisco’s rent is still the most expensive.
While San Jose’s median one-bedroom rent stayed flat from August to September at $2,200 — a decrease of 1.3% year-over-year — parts of Silicon Valley are seeing a notable rebound. Mountain View’s median rent increased 4% month-over-month to $2,600, and Santa Clara’s one-bedroom rent rose 5% to $2,520. Mountain View and Santa Clara have the second- and third-highest one-bedroom rents in the Bay Area, respectively, according to Zumper.
“It’s likely a combination of people returning in preparation for offices reopening and local supply constraints,” Andrews said. “These places didn’t see rent fall by as much as San Francisco because more people left San Francisco. So if their vacancy rates weren’t as high as the three big Bay cities, their rents would be more responsive to people returning to the area.”
Oakland landed in eighth place on the list of highest rents in the nation, with a one-bedroom median rent of $2,000 in September — unchanged since August. Among Bay Area cities, Oakland was far down the list at No. 14.
The Zumper San Francisco Metro Area Report analyzed active listings in September 2021 across 19 metro cities to show the most and least expensive cities and cities with the fastest growing rents. The California one bedroom median rent was $1,914 last month.
Concord offered the least expensive one-bedroom median rental price in the Bay Area, at $1,800, a drop of 0.6% month-over-month. Hayward’s median rent of $1,900 was unchanged from August, and Richmond’s price increased 3.8% to $1,920 in September.
Campbell in Santa Clara County had the highest year-over-year rent growth in the San Francisco metro area, at 11.2%, and tied with Sunnyvale for the biggest month-over-month increase, at 5.1%. Walnut Creek also saw a big jump in one-bedroom rental prices from August to September, at 7.9%. Redwood City saw the biggest year-over-year decline, at 13.7%.
With the latest pandemic surge fueled by the delta variant in decline, Andrews said the main thing to watch is whether Bay Area offices reopen and lure people back to the cities.
But at this point for San Francisco, it’s a tossup, he said.
“It’s still possible San Francisco rent starts rising again and is the most expensive one-bedroom median again,” he said. “I think it’s also possible that the pandemic is an event that has permanently lowered rent in San Francisco, at least relative to other metro markets.”
Zumper’s reports analyze data from over 1 million active listings on its site across the United States and include newer builds. Data is aggregated monthly to calculate median asking rents for the top 100 metro areas by population.
Kellie Hwang is a San Francisco Chronicle staff writer. Email: [email protected] Twitter: @KellieHwang
Kellie Hwang is the engagement reporter for The San Francisco Chronicle. Before returning to the Bay Area, she held roles as transportation reporter and trending news reporter at the IndyStar in Indianapolis. Previously, Kellie covered dining news and trends, visual arts, events and nightlife for the Arizona Republic, and freelanced for the former Contra Costa Times. Kellie also serves as co-director of the Asian American Journalists Association Features Forum. She is a University of Washington graduate.


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