Why S.F. rents are likely to remain the highest in the nation?
San Francisco rents are down slightly in 2018, but are still the highest in the nation, and likely to remain there according to research from Zumper. In its annual wrap-up report, the rental site showed that, once again, San Francisco had the highest median rents in the country, with a median of $3,560 for a one-bedroom apartment and a two-bedroom median of $4,720.
While those numbers are down slightly and flat, respectively, year-over-year, Zumper Data Analyst Crystal Chen explained why no other city was able to catch up.”Though San Francisco had flattening rents this past year, many of the top 10 markets experienced a similar trend as well,” she said. “Since there wasn’t a ton of movement in these cities throughout 2018, I’m not surprised San Francisco remained on top. Boston, Oakland, and LA rents had large one-bedroom year-over-year growth rates, all above 9 percent, but San Francisco was still around $1K-plus more expensive than these cities and I doubt any of them would move up that much in rent within a year.”
She added that San Francisco’s available square footage is also the second-smallest in the country, just behind New York City, and with the economy softening and developers starting to become concerned about the possibility of a recession, it’s highly unlikely that building here will keep up with demand for the foreseeable future.
“The cities surrounding San Francisco will continue to bear the weight of ever-growing prices since the demand for housing in the Bay Area will stay strong and people will look for more affordability in San Francisco’s neighboring areas,” she said. Additional Zumper research shows double-digit increases in Redwood City, Santa Clara, Oakland and Mountain View in 2018. In fact, Mountain View rents are now just under San Francisco levels, according to Zumper data.
Within the city itself, renters also seemed to be looking for bargains. “Historically cheaper, family-friendly neighborhoods like Outer Sunset and Lakeshore have seen increased demands throughout the year and this will most likely continue to grow,” Chen predicted.
It turns out that, in Chen’s research, the newest, most expensive buildings at the tip-top of the market are having the hardest time finding tenants. “Many apartments are still offering incentives, like a month of free rent or up to X amount off, so the cooling off experienced last year in this type of apartment has only continued,” she said. “I don’t think 2019 will see a high resurgence of demand for luxury housing.”
By Emily Landes