Wednesday, May 19, 2021

Rental Real Estate: Still Not Normal

Apartment rents have been rising in San Francisco, but whether the trend will continue is highly uncertain:
San Francisco rents rose 3% in April, to a median $2,157 for a one-bedroom apartment, according to real estate site Apartment List. But another report by the listing site Zumper found that San Francisco rents dropped 1.9% from last month, and it calculated a higher $2,600 median price for the same size apartment...

Apartment List found that San Francisco rents are still more than 19% lower than last April, though prices remain significantly higher than other major cities like New York, Los Angeles and Seattle. Zumper reported that asking rents were down by nearly 25% compared to last April, and it calculated an even larger 30% drop in nearby Redwood City and a 28% decline in Facebook’s home of Menlo Park...

While things may be looking up for some landlords, it’s far less clear how confusion about eviction moratorium and rent relief programs may play out for San Francisco tenants hit hardest by job losses and instability triggered by pandemic shutdowns.
IMHO, the biggest questions in the rental market are the number of units on which back rent is owed and whether landlords will be free to evict tenants for non-payment on July 1st. If Sacramento does not extend the moratorium, both the supply of apartments and the demand (evicted tenants) will come on to the market. Counties that are inhospitable to the "cancel rent" movement should return to normal quickly.

As to what "normal" means, it wouldn't be surprising if rents continue to fall because of the exodus of skilled workers from the Bay Area, and the inclination of those that remain to buy a single-family house instead of renting a unit in a multi-family dwelling.

Below: these moderate density units in Foster City still rent or sell quickly.

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