Slowly but surely, the party seems to be coming to an end.
If you haven’t re-negotiated your lease or found a new apartment, you better act fast. The window for taking advantage of lower rents in San Francisco appears to be closing.
The past couple of months have seen small but significant increases in median rents in the city, while a host of external factors points to even bigger increases on the way.
In May, median one-bedroom rents in San Francisco increased 2 percent, to $2,650, according to real estate analytics company Zumper. Two-bedroom rents jumped 3 percent, to $3,600.
In Silicon Valley, rents are rising even faster. Palo Alto, Mountain View, and San Jose all saw one-bedroom rent increases of greater than 5 percent last month.
Of course, these cities have a long way to go to get back to their pre-pandemic prices. San Francisco and Silicon Valley are among the places that saw the steepest rent declines in the nation over the past year, as remote work became the norm across the tech industry. San Francisco rents are still down about 24 percent compared to pre-pandemic, or 30 percent compared to their 2015 peak, according to the real estate website Socketsite.
Socketsite reports that the number of units for rent has declined about 20 percent over the last month. However, there are still 45 percent more units on the market than a year ago, and 85 percent more than before the pandemic. Those numbers indicate that vacancy rates are declining, and rents are rising, but there remains a lot of inventory on the market.
As the things that make San Francisco a desirable place to live begin to open back up in the coming months, it’s hard to imagine rents going down.
On June 15, San Francisco will drop virtually all COVID restrictions, which translates to full-capacity bars, restaurants, museums, cannabis lounges and Giants games. Later in the summer, concerts and music festivals are slated to return, including the Stern Grove summer concert series and the Noise Pop Festival. By September, many major employers in the Bay Area are plotting partial returns to in-person work. That means former San Francisco residents who moved to Tahoe or Turlock are either going to have to brave multi-hour commutes a few days a week, or rethink their priorities.
At the same time, there are some indications that people’s aversion to smaller homes in multifamily buildings is waning. In the Examiner, real estate columnist Larry Rosen reported that over 1,000 condos were sold in the city in March and April of this year, more than any two-month period in the last 10 years. Since January 2021, the median condo sales price has increased 13.5 percent.
If condos are getting more expensive, that tends to mean apartment rents will follow. But then again, if we’ve learned anything from the past year, it’s to expect the unexpected.
So just to be safe, ink that lease while you still can afford it!