S.F. rent prices plunge as much as 31% — steepest decline in U.S., new report says

More evidence shows that San Francisco’s astronomical rent prices are plummeting closer to earth.

According to the September rent report from listings website Realtor.com, San Francisco’s rental prices experienced the steepest declines in the nation year-over-year in all three of its categories: studio, one-bedroom and two-bedroom.

Changes in remote work policies during the coronavirus pandemic are driving the trend toward falling rents in expensive urban areas across the nation, especially in tech-heavy rental markets like the Bay Area.

“What we’re seeing is really the move away from high cost, particularly in urban downtowns, toward the suburbs and toward affordability,” said Realtor.com senior economist George Ratiu. “A good number of companies, and San Francisco is the leader in this, recognize the tremendous burdens, and tech companies were some of the first to announce extended remote work policies into next year.”

Workers were able to move out of high-cost rentals close to their workplaces in San Francisco and Silicon Valley, and into areas with more affordable rent, or into larger properties in quieter neighborhoods and with amenities such as a home office or home gym, Ratiu said.

Median rent prices for studio apartments in San Francisco declined 31% year-over-year to $2,285 in September, according to Realtor.com. The median price fell 24.2% to $2,873 for one-bedroom apartments, and dropped 21.3% to $3,931 for two-bedroom units. Apartment List and Zumper recently released similar findings in their September rent reports.

Close behind San Francisco were San Mateo and Santa Clara counties, both in the top four for all three categories of rent declines. Santa Clara had the third steepest drop nationally in studio apartment rental prices, down 19.2%, and San Mateo was fourth, falling 17.6%. Alameda also made the list, coming in 10th with a 12.1% decrease in studio rental prices.

For one-bedroom apartments, San Mateo was second on the list of steepest declines, with rents shrinking 12.5%. Santa Clara came in third with a 12% drop. San Mateo and Santa Clara fell 11.1% and 9.2%, respectively, in median two-bedroom rent.

By comparison nationally, Realtor.com found that in the 100 largest U.S. counties, the median studio rent was $1,347, down 0.5% year over year; the median for one-bedrooms was $1,502, up 1%; and the median rent for a two-bedroom unit was $1,873, up 2.3%.

Ratiu said it’s not surprising to see the strong migration toward affordability in San Francisco and Silicon Valley, where before the pandemic, many people were willing to pay a premium to live close to their places of employment. He said at least in the next year, he expects the softening of the San Francisco rental market to continue, especially as employers see the positive side of remote work.

“We’ve seen a lot more companies … beginning to realize that remote work has now proven to be a very viable business proposition,” he said. “Companies are also recognizing that it is tough for many employees to make ends meet … so they’re taking advantage of geographic dispersion and setting up offices in lower-cost areas.”

Ratiu said he thinks many companies will adopt a hybrid approach, where office workers will spend part of their time in the office, the other part working remotely.

For its rental report, Realtor.com examines units including apartment communities and private rentals, such as condos, town homes and single-family homes. National rents are calculated from the average median rental prices for the 100 largest U.S. counties, except for studios, which are based on 80 of the counties with at least 20 listings.

Realtor.com is operated by Move Inc., a subsidiary of News Corp., under a license from the National Association of Realtors.

Kellie Hwang is a San Francisco Chronicle staff writer. Email: kellie.hwang@sfchronicle.com Twitter: @KellieHwang

Article source: https://www.sfchronicle.com/bayarea/article/S-F-rent-prices-plunge-as-much-as-31-15644663.php

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