Rent is dropping quickly in San Francisco

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

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

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Thomas S.
Member since 2016 · 13k+ posts · 12k+ votes
9y
"Please elaborate on how the entire coast is segregated from both the rest of the US"
CA is a specialty high end market impacted more by money than brains. Their is no logical rational for the CA market aside from too much money in the hands of people that do not understand the value of money. A dollar in the rest of the country is worth 25 cents or less in CA.
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Jim Y.
Real Estate Investor · Tacoma, WA · Member since 2013 · 87 posts · 55 votes
9y
Greg S. Not all California is "West Coast". This term only applies to large cities actually on the coast. Inland California is much different, market-wise, and less stable. The reason to think that the US west coast isn't affected by real estate like the rest of the country is because the cities of the west coast are self-sustained to a higher degree than other cities, with truly global economies, and global real estate investment money.
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Account Closed
Rental Property Investor · Oakland, CA · Member since 2014 · 730 posts · 1k+ votes
9y
Originally posted by @Thomas S.:
"Please elaborate on how the entire coast is segregated from both the rest of the US"
CA is a specialty high end market impacted more by money than brains. Their is no logical rational for the CA market aside from too much money in the hands of people that do not understand the value of money. A dollar in the rest of the country is worth 25 cents or less in CA.
Great job making a broad generalization on 35 million people (that we don't know the value of money). Let me guess, you're a Trump supporter.
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Joel OwensBusiness Member
Moderator
Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
9y
Class A multifamily is overbuilt in a lot of states currently. As mentioned if location is equal and people can get brand new everything for a little more then the additional 1,500 to 2,000 in rent a year gets them way more fun factor in their lives.
Rents are starting to soften nationally and rent growth is stalling some.
The biggest investors at risk are developers of 300 unit apartment buildings for example. They need to be very conservative with underwriting and asking rents as the timeline for those projects to get built and stabilized is years and years. Unless the developer has very deep pockets from other projects over decades and can (float) a property in a cycle change until the next upswing they could lose everything.
I saw overbuilding in the last down cycle in 2007,2008 nationally.
Some vultures wait in the wings for the less informed developers to pour cash in to get a project to certain completion and then swoop in when they are struggling to buy for cheap and finish out.
Now this is just the start so some markets of course are still doing well and not showing many cracks yet in the dam.
What is in big demand I have seen is middle class apartments but at least where I live nobody wants them. Developers want to build them but about a thousand people show up to protest zoning hearing saying it will bring crime,transients, and drop house values in an upscale area. Each time those projects fail to get off the ground from proposal stage.
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Diane G.
OP
CA · Member since 2016 · 1k+ posts · 1k+ votes
9y
RENTED OUT .......
Dropped my price from 4300 to 4150.... Lol
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Moses F.
Boca Raton, FL · Member since 2017 · 2 posts · 0 votes
9y
@Diane G. Happy to hear you rented it out. While I don't want any type of correction to happen in San Francisco, I do think the Market is extremely out of wack with reality. I know the history of San Francisco is extremely boom and bust, and working in technology I can tell you everyone is looking for the next gold mine. I cannot however consider an engineer or doctor past 35 who is making 300K or 400K wanting 5 roommates to survive. This can't last forever at this rate, so I expect a correction at some point. Now timing or when? Well that depends mostly on when we believe that the Gold Rush doesn't necessarily have to happen in that city. Maybe it will never happen, or maybe it will be like Australia, recession proof for a generation. I however think we may enter a recession sooner than that.
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Diane G.
OP
CA · Member since 2016 · 1k+ posts · 1k+ votes
9y
@Moses F.
it has been on the market for 8 days, but i dropped the price from 4300 to 4150....
SF is now flooded with rentals.. Not looking good for sure...
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Moses F.
Boca Raton, FL · Member since 2017 · 2 posts · 0 votes
9y
My investment thesis has always been for the long haul. Always, there will be down years, there will be good years. I personally am someone who is looking for a good time to get into that market. Hang in, even in the bad years, you never know what could happen in the years to come :)
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Diane G.
OP
CA · Member since 2016 · 1k+ posts · 1k+ votes
9y
@Moses F.
I have a coworker who just relocated to bay area from TX told me that everyone he ran into has a roommate here... He just can't imagine it......
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David Faulkner
Investor · Orange County, CA · Member since 2015 · 2k+ posts · 3k+ votes
9y
Originally posted by @Diane G.:

@Moses F.
it has been on the market for 8 days, but i dropped the price from 4300 to 4150....
SF is now flooded with rentals.. Not looking good for sure...
Diane, I'm happy you got it rented and not saying that this could not be the start of something bigger, but in the grand scheme of things I'm not sure that dropping rent 3% because it took a whole 8 days to rent is really a signal of a real estate catastrophy. If you are waiting for a 20% drop in prices in SF before re-deploying your war chest capital, I suspect you may have to wait a LONG time as I doubt it will happen in this downturn just based on previous dips and things are not nearly as crazy (yet anyway) as last peak ... my crystal ball is no clearer than yours is, though, and if I'm wrong I will be glad as mentioned.
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Sean Carroll
Investor · San Jose, CA · Member since 2017 · 453 posts · 254 votes
9y
@Diane G. I have noticed that rent has been mainly stagnant at large complexes over the past year but I have not seen any drop to much except for the special deals here and there. The problem with out area is it is still expected to grow for many more years and as you know we have a huge housing shortage :/
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Amit M.
Rental Property Investor · San Francisco, CA · Member since 2013 · 1k+ posts · 1k+ votes
9y
-3% drop in rent, rented out in 8 days...yup, sounds like a disaster is about to strike the SF rental market...
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Diane G.
OP
CA · Member since 2016 · 1k+ posts · 1k+ votes
9y
@ David Faulkner @ amit m You are right, 8 days does not sound like a whole lot of time , especially compared to those in Memphis.... but If you look at just how many listing on the market now, it is still scary.... I was able to do 8 days because I asked for $4150 when market price should be at $4500... I was $350 below market
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Drew Pak
San Francisco, CA · Member since 2016 · 14 posts · 5 votes
9y
@Diane G. Expansion happens in 1,5,10,30,60 mile radius.
So as San Francisco expanded and people became priced out they moved (5 miles ) away to Oakland, Hayward, Redwood etc. As those cities became more expense people moved to Vallejo and even to Sacramento. As San Francisco pulls back then other cities will pull back. Similar to the ocean, as the tide rise, it rises all boats, when it recedes all boats sink again.
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Account Closed
Investor · Los Angeles, CA · Member since 2015 · 53 posts · 34 votes
9y
@Diane G.
What neighborhood?
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Diane G.
OP
CA · Member since 2016 · 1k+ posts · 1k+ votes
9y
@Account Closed
Russian Hill.... 2/1 condo....
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Diane G.
OP
CA · Member since 2016 · 1k+ posts · 1k+ votes
9y
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Diane G.
OP
CA · Member since 2016 · 1k+ posts · 1k+ votes
9y
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Account Closed
Johnson City, TN · Member since 2014 · 586 posts · 705 votes
9y
People often comment on the strength of the job market but I think the real answer is in wages. Many people are working for the same or less than they did 10 years ago.
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Mary White
Rental Property Investor · Klamath Falls, OR · Member since 2016 · 146 posts · 213 votes
9y
It's interesting that so many people equate places like SF with the West Coast. There has to be a quality of life question at some point. I know families leaving the area and moving to very nice places like Bend, Oregon to work in the high tech sector and escape the insane rent prices down there. My question is do the changing demographics impact the rental rates? Will companies leave SF for places where more people want to live. Is there actually a supply overage or decreasing demand driving down rents? If you can make the same high tech wages in Bend, but pay $1000 for rent, why would you stay in SF?
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David Benton
Investor · Charleston, SC · Member since 2015 · 113 posts · 50 votes
9y
There may be a cooling down if unemployment is up for some reason or too many multis built and absorption on the decline etc... It's always supply and demand but I would not rely on Zillow for information. The garbage in garbage out concept is too common on Zillow.
For a more reliable view of the market, contact a knowledgeable Realtor or Property Manager in the area for advice on the rental market and inventory.
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Bill Henley
Investor · Berkeley, CA · Member since 2016 · 45 posts · 43 votes
9y
My wife and I are making a bet that the Bay Area market is about to nose over and are selling our little 2+1 house in Albany CA (between Berkeley and El Cerrito). It went on MLS on Friday. www.911evelyn.com. About ten agents brought clients through on Saturday. Open house #1, 2:00-4:30 on Sunday (yesterday), our agent says 200 people walked through and she handed out 100 flyers. It's either, "This *has* to be the high point of this market," or, "I sure wish we'd held on another 6-12 months." Time will tell.
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David Faulkner
Investor · Orange County, CA · Member since 2015 · 2k+ posts · 3k+ votes
9y
Originally posted by @Mary White:
It's interesting that so many people equate places like SF with the West Coast. There has to be a quality of life question at some point. I know families leaving the area and moving to very nice places like Bend, Oregon to work in the high tech sector and escape the insane rent prices down there. My question is do the changing demographics impact the rental rates? Will companies leave SF for places where more people want to live. Is there actually a supply overage or decreasing demand driving down rents? If you can make the same high tech wages in Bend, but pay $1000 for rent, why would you stay in SF?
That has been happening in West Coast CA for some time, and you are correct that it has been partially driving an increase in prices in NW coast like Oregon you mentioned, even though folks up that way seem to hate CA for it ... the thing about that, though, is that what happens and continues to happen is when folks move out then wealthier folks move in ... it has been gentrification on a massive scale along the coasts of most major cities in CA. As soon as I see somebody move out of their beach house in CA and it stays vacant for months on end is when I will start to worry, but I just have never seen that in my lifetime, even in 2009 in the depths of the worst housing crash since the great depression ... the only vacant properties were the ones the banks were holding as shadow inventory and would not sell, but the minute they put them up for sale in line with the comps they sold fairly quickly. Prices dropped then maybe 20% and then slammed back up past their previous highs in a matter of a few years for primo coastal neighborhoods. Not saying it could never happen, just that it has not happened over any long term period in my lifetime, my parent's lifetime, or my grandparent's lifetime living in SoCal.
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Bill Henley
Investor · Berkeley, CA · Member since 2016 · 45 posts · 43 votes
9y
I was in court in SF Friday for a Case Management Conference and the judge said San Francisco today is about 5% African American, and that if he sees 100 potential jurors appear on a jury summons only one will be African American. This is the result of 30 years of gentrification. If that 5% demo number is correct I wonder if there is a more segregated city in America.
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Mary White
Rental Property Investor · Klamath Falls, OR · Member since 2016 · 146 posts · 213 votes
9y
If you draw your segregation lines along black and white you'll get a very different number than if you take into account the Asian American and Hispanic American population in SF and the Northwest. I'm not saying there isn't segregation, but there's definitely more to it than just that. There are a lot of wealthy non-white people living in SF, Portland and Seattle. SF is definitely it's own world so maybe it's the most segregated.
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