Rent is dropping quickly in San Francisco

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Rent is dropping quickly in San Francisco

Diane G.
CA · Member since 2016 · 1k+ posts · 1k+ votes

So I have a rental that is currently on the market in the A+ neighborhood in San Francisco.. When I posted the listing on Zillow 13 days ago, the Zillow calculated rent is $4600, and that became $4300 today...

Also, for the first time in maybe 10 years, I have people come in and asked if I can drop my asking price from $4250 to $4000...

I think the correction that many of us on BP anticipated is starting now....

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Steve R.
Investor · San Francisco, CA · Member since 2014 · 2 posts · 5 votes
9y

Zillow is not the only source indicating that rents in SF are dropping.

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  • Frank Trigoso
    Investor · Miami, FL · Member since 2016 · 75 posts · 23 votes
    9y

    Zillow is not accurate. One deal it states $1300 per month; however, I earn a larger amount than that.

    0Reply
  • Michael Wu
    Queens, NY · Member since 2017 · 43 posts · 7 votes
    9y
    Agree, Zillow isn't accurate. Check the rents around the area and see what you can do.
    0Reply
  • Diane G.
    OP
    CA · Member since 2016 · 1k+ posts · 1k+ votes
    9y

    I understand Zillow is not accurate... My main point is that rental market is cooling down now... Even for a A property in SF... It will spread soon to other areas....

    1Reply
  • Brandon Battle
    Real Estate Agent · Buena Park, CA · Member since 2016 · 743 posts · 424 votes
    9y
    Diane G. ,how are you marketing the rental? If not enough people know it's available,the rent offerings are going to drop.If your rental is near the techies corridor (Van Ness,Lombard,SOMO) you should be trying to advertise on their company newsletters.
    0Reply
  • Diane G.
    OP
    CA · Member since 2016 · 1k+ posts · 1k+ votes
    9y

    @Brandon Battle

    Thanks for the thoughts... I have been advertising it the same way I always did for the past 10 years... On Zillow, Craiglist etc... But this time it feels very different...For example, it is a new thing that people would ask for lower rents...

    The last time it was on the market, people competed for it...So that is my point, market is cooling down quickly now...

    I am sure soon it will spread....

    3Reply
  • Aaron Hurst
    San Francisco, CA · Member since 2016 · 15 posts · 8 votes
    9y

    @Diane G.  Yup, rents in SF are definitely cooling off... at least a little... but I'd be hesitant to draw any conclusions in other areas that weren't similarly overheated.

    @Brandon Battle Company newsletters?  Sounds antiquated.  None of the technology companies I've worked at would ever consider external submissions to internal communication lists.

    @Diane G.

    1Reply
  • Steve R.
    Investor · San Francisco, CA · Member since 2014 · 2 posts · 5 votes
    9y

    Zillow is not the only source indicating that rents in SF are dropping.

    5Reply
  • Thomas S.
    Member since 2016 · 13k+ posts · 12k+ votes
    9y

    The west coast is "special". What happens there in real estate has very little bearing on the rest of the world. 

    1Reply
  • Natalie KolodijBusiness Member
    Moderator
    Tax Strategist| National Tax Educator| Accepting New Clients · Member since 2014 · 3k+ posts · 4k+ votes
    9y

    @Thomas S. 

    Please elaborate on how the entire coast is segregated from both the rest of the US and yet combined into a singular market per your comment ?

    Podcast Guest on Show Pay Less Tax to the IRS This Year With THESE Real Estate Tax Strategies
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    3Reply
  • David Song
    Real Estate Broker · Redwood City, CA · Member since 2014 · 679 posts · 888 votes
    9y
    The house price in San Mateo county seems go up this month again. Just saw a $850 k SFR 1400 sf, in less desirable area of San Mateo, last weekend. Needs everything, total house remodel. This is the lowest priced house on the market and the agent expects to receive multiple bids on it. Last December, I saw a SFH in San Mateo in a little better area, 2000 sf, 850 k and stayed on the market for over 4 weeks. In my view, mid peninsula market will see a record high in 2017, contrary to a lot of speculation that it will decrease. The slowdown has already happened last year, 2016 4 th quarter. It seems to me that is already behind us. 2017 likely a record high.
    0Reply
  • Brent Coombs
    Investor · Cleveland, OH · Member since 2015 · 6k+ posts · 2k+ votes
    9y

    @David Song those record-breaking 2017 Investors/Gamblers can always HOPE that the rents (and values) will continue to rise at their historic rates, but, "hope" won't make it so...

    0Reply
  • David Faulkner
    Investor · Orange County, CA · Member since 2015 · 2k+ posts · 3k+ votes
    9y

    I sure hope you are right Diane G. and hope you are ready for it in case you are ...

    0Reply
  • Diane G.
    OP
    CA · Member since 2016 · 1k+ posts · 1k+ votes
    9y
    I just checked rental price around where I live.... 3/2 single family home going for $4300 last year is now down to $3500.... Holly cow !!!!! I am certainly ready for the market to drop... kept my powder dry so far.... Finally .... but I won't jump in anytime soon... once correction starts, it is going to drop for 2-3 years ...
    0Reply
  • Sean Walton
    Wholetailer & Architect · San Francisco, CA · Member since 2015 · 544 posts · 298 votes
    9y
    It has a lot to do with all the new apartment buildings coming online in soma and the van ness corridor. Supply was so tight before it drove up prices. The Short term rental law may have a marginal effect as well. I used to get between $4200 and 4000. Now more in the $3900 to $3800 range for furnished month to month 1br 1ba condo. The job market is strong but I think rental and home prices still have a lot of young people looking to other cities around the country
    2Reply
  • David Faulkner
    Investor · Orange County, CA · Member since 2015 · 2k+ posts · 3k+ votes
    9y
    Originally posted by @Diane G.:

    I just checked rental price around where I live.... 3/2 single family home going for $4300 last year is now down to $3500.... Holly cow !!!!!

    I am certainly ready for the market to drop... kept my powder dry so far....

    Finally .... but I won't jump in anytime soon... once correction starts, it is going to drop for 2-3 years ...

    We shall see ... but I think I see your thesis between this and your other post ... when CA sneezes, Memphis catches a cold.

    1Reply
  • Jesse C.
    San Francisco, CA · Member since 2016 · 10 posts · 3 votes
    9y

    For more accurate block by block rents, try out www.rentometer.com. Its much more accurate than Zillow and has good local penetration in SF. 

    2Reply
  • Diane G.
    OP
    CA · Member since 2016 · 1k+ posts · 1k+ votes
    9y

    @David Faulkner

    When a correction hits, nobody is spared... it is just a matter of be on different waves...

    Listings in the cities that I have been watching like Sunnyvale, Los Gatos have all more than tripled compared to last year... So we shall see.....

    @Sean Walton

    Personally, I have never had soooo many friends/neighbors that are out of a job now... I can easily think of 4-5 now... No kidding...

    0Reply
  • Michael Knudsen
    Investor · Los Angeles, CA · Member since 2017 · 41 posts · 17 votes
    9y
    Rents in SF are directly correlated with venture capital funding, which has been drying up over the last year.
    1Reply
  • Daniel Guas
    Real Estate Professional · Levittown, NY · Member since 2016 · 38 posts · 10 votes
    9y

    In my humble opinion I don't think any type of correction is happening now. If for the last 10 years you can say that nobody ever came in and asked you to drop your rental price then you should consider yourself very lucky. I can tell you in the New York market at least one person every time I have a rental come up will try and negotiate the price with me. I always tell them I can't do anything for them and I move on to the next renter who can afford the rent I want. 

    I agree with what everyone has been saying about the Zillow zestimate. I've found that number to be spot on at times, but also way off at times. 

    Also, when you do comps in your area make sure they are really comparable to what you have for. For example, I recently saw a 3/1 house in my area rent for $2100. I would never get anything less than $2700 for a 3/1, but my rentals are always in excellent condition and rent very quickly. All the counter tops are granite, cabinets either are new or have been replaced in the last 5 years, bathrooms are fully updated, etc. I want what the market offers, but I also put out a product that the market wants. The landlord in my area put out a product that should only get $2100 rent. I would never let another landlord's inability to keep up with his rental effect how I keep and market my rentals and you shouldn't either. Good Luck! :)

    3Reply
  • Joe SplitrockPro Member
    Moderator
    Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
    9y

    @Diane G. a year ago I would have just said Zillow is horribly inaccurate, but in my market it has gotten much better. I think as more landlords are using the service, their data points are getting better at calculating rent. No data source is perfect of course.

    Still I think you are seeing a temporary pull back. Jobs are the best economic indicator. Real estate tracks up and down with the economy. Right now small businesses are aggressively hiring people. Deregulation is encouraging businesses and investors. This economy has lots of gas left in the tank, so if you are sitting at the side lines today, you may be waiting a while.

    I could be totally wrong too. Nobody can predict the future because there are too many unforeseen variables that can flip it in a moment.

    1Reply
  • Ariel Smith
    Rental Property Investor · San Diego, CA · Member since 2016 · 306 posts · 205 votes
    9y

    @Sean Walton is right. The new construction in the city has been a huge factor in the rents going down. Same with down here on the Peninsula. These brand new buildings have 2 bedrooms renting for $4k/month. Pool, gym, rooftop deck, business centers, bike parking, and all the bells and whistles. As a renter, when I'm looking at an old building for $3800/month or new construction for $4k, it's a no brainer what I'd choose. 

    3Reply
  • Drew Pak
    San Francisco, CA · Member since 2016 · 14 posts · 5 votes
    9y

    @Diane G. There is a glut of high end rental properties in the market currently. Our rents have come down significantly as well and areas in the traditional well to do areas have seen rental prices come down as the SOMA , dog patch and  3rd street condo projects have been completed. High end condo sales have cooled significantly as well and developers are loosing up restrictions on the own to rental mix. This is causing a lot of the softness that you are see. 

    Along with the VC & other capital starting to become more costly we should see a stabilization and softening in the rental markets over the next few years. 

    0Reply
  • Diane G.
    OP
    CA · Member since 2016 · 1k+ posts · 1k+ votes
    9y

    @Drew Pak

    Good to know that I am not the only one seeing and feeling the cool down...

    It sucks when you try to rent a unit, and I just dropped my price from $4300 to $4150...

    That is fine, and I just hope that this cool down, at later this year or 2018, will provide a chance to buy... I have been priced out for a few years now....

    And not just San Francisco,  I see softness down in south bay too... Just not as quickly as San Francisco...

    If I recalled correctly, with the 2009 meltdown, I noticed that SF started to cool down in 2005, way before the rest of the market... I wonder if we are going to have the same thing this time again... With San Francisco leading the way down.....

    0Reply
  • David Faulkner
    Investor · Orange County, CA · Member since 2015 · 2k+ posts · 3k+ votes
    9y
    Originally posted by @Diane G.:

    @David Faulkner

    When a correction hits, nobody is spared... it is just a matter of be on different waves...

    Listings in the cities that I have been watching like Sunnyvale, Los Gatos have all more than tripled compared to last year... So we shall see.....

    @Sean Walton

    Personally, I have never had soooo many friends/neighbors that are out of a job now... I can easily think of 4-5 now... No kidding...

     Well, if you are right and it is starting for LA too, then I owe @Alex C. a beer:

    https://www.biggerpockets.com/forums/616/topics/42...

    0Reply
  • Diane G.
    OP
    CA · Member since 2016 · 1k+ posts · 1k+ votes
    9y

    @David Faulkner

    I felt like being "priced out" for a while now, and I definitely welcome a 20% correction.... 

    1Reply
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