According to the following Business Times article, San Francisco rents may have peaked.
San Francisco’s red hot rental market has received a splash of cold water in the past year, with median 1-bedroom rents falling by 4.9 percent, according to data from real estate site Zumper.
That reverses the pattern from 2015, which saw rents rise 4.5 percent and 2014, where rents surged up an eye-popping 13.5 percent. Check at our map below for which neighborhoods are hottest.
However even with the decline this year, the city sits firmly in the top spot when it comes to the most expensive rental market in the country, with its $3,300 median 1-bedroom rents beating out New York City by $300.
Falling rents were seen in previous high-flying neighborhoods in the city’s Northeast like Nob Hill, which was down 6 percent. The biggest drop in rental prices was seen in the NoPa neighborhood, which is down 9 percent since last year and Noe Valley which dropped 8 percent. Other neighborhoods seeing major median rent price declines include Ashbury Heights, Civic Center and Nob Hill.
“Overall, the priciest neighborhoods seem to have hit a price ceiling that renters are willing to pay,” the Zumper report said.
The data also traced a shift from the most expensive San Francisco neighborhoods like SOMA, Downtown, and Pacific Heights, to the outer, and less expensive, areas of the city, like Bayview, Bernal Heights, and the Outer Richmond.
Perks being offered by new luxury buildings like 4 to 6 weeks of free rent, waived or reduced security deposits and parking fees have, for the most part, not been enough to stem the migration.
Some of the neighborhoods which have received a new influx of renters have become the beneficiaries of the largest rent increases over the past year.
Bayview was the only neighborhood to see double-digit rent increases with a median rents rising 11.5 percent in the neighborhood. Other parts of the city seeing big rent rises include Bernal Heights and the Outer Richmond, which saw rent jump up 9 percent and 6 percent respectively.
According to Zumper, the cooling of the tech boom and the roughly 10,000 rental units set to be added to the city’s inventory this year – the most in a decade – mean that the trend of declining rents look like they will continue past 2016.
“I do expect the trend to continue since we have a combination of a slowdown in tech and more inventory hitting the market. Hiring at early stage start-ups has dropped significantly since it has become harder to fundraise in this climate,” said Crystal Chen with Zumper.
