Rent prices drop again in S.F. and other Bay Area cities, but ‘freefall’ may be slowing

The ultra-pricey Bay Area continues to lead the nation in declining housing rental prices, but new data show the pandemic “freefall” may be slowing.

In October, San Francisco once again topped the U.S. list for biggest rental price decreases, according to listing websites Zumper and Apartment List. Zumper reported that the average one-bedroom rent in the city was $2,800, a decline of 1.1% from the previous month and a 20.7% decline year over year.

No. 4 on the list is San Jose, with a median one-bedroom rent of $2,120, a decrease of $110 from September. Oakland is fifth on the list, dropping to $2,020 last month, which is also a decline of $110 from the previous month.

Oakland had the largest one-bedroom median rent decrease from the previous month, falling 5.2%, but it’s still the fifth most expensive rental market in the country.

All three Bay Area cities are in a group of historically expensive cities that have seen their rental prices plunge since May, said Zumper analyst Neil Gerstein.

“Despite these record-breaking year-over-year decreases, there are some signs that drops could be slowing down in some expensive cities,” Gerstein said. “San Francisco, which has been in a rental price freefall, experienced its lowest monthly decrease since April at -1.1%.”

The previous month, that decrease was 6.9% in San Francisco.

Price declines also slowed in the nation’s second most expensive city, New York, from 3.7% in September to 1.9% in October. Year over year, the decline is 15%, and the median price for a one-bedroom apartment in the Big Apple is now $2,550, according to Zumper.

If prices stabilize, San Francisco will continue to be the nation’s most expensive metro area, according to the Zumper report.

Gerstein said the Bay Area metro region had an average decrease of 0.9% last month, compared with a decline of 2.4% the previous month.

Zumper analyzes rental data from more than 1 million active listings across the country. It includes new construction and excludes listings that are currently occupied or no longer available.

Apartment List’s November national rent report said the dip in rental prices nationally has stabilized since the beginning of the pandemic, with October declines in line with “more typical” seasonal trends.

The Apartment List report showed large variations by region. Rent prices continue to drop rapidly in pricey coastal cities such as San Francisco and New York, while growth in rental prices has increased during the pandemic in some midsize cities in more affordable areas such as Boise, Idaho.

 Rent prices drop again in S.F. and other Bay Area cities, but ‘freefall’ may be slowing

Since March, rents are down in 41 of the largest 100 U.S. cities, according to the report. They include San Francisco, which still tops the list for rent decreases, dropping 23.4% year over year and 4.9% from September. In Apartment List’s November San Francisco rent report, the median rent is $2,132 for a one-bedroom and $2,467 for a two-bedroom.

San Jose is fifth on the list, declining 12.2% since March with an average two-bedroom rent of $2,111, and Oakland is at the No. 7 spot going down 9.8% to $2,049 median rent for a two-bedroom. Fremont also made the list in the 10th position, declining 7.6% since March with an average $2,747 two-bedroom rent.

 Rent prices drop again in S.F. and other Bay Area cities, but ‘freefall’ may be slowing

The San Francisco rent report shows that Pleasant Hill is the only large Bay Area city to see an increase year over year, at 1.8%, with a one-bedroom median price of $1,761. Dublin has the highest Bay Area rental prices with a two-bedroom median of $3,275.

Apartment List’s national rent report noted that many cities where rent is increasing fastest are within commute distance of larger job centers. Reno, for example, at No. 5 on the list of cities with the greatest rent growth since March at 6.6%, is within “feasible” distance for an occasional trip to the Bay Area, the report said. “This trend may indicate that even workers who are planning for a permanent shift toward remote work still value the option to go into the office when needed,” Apartment List said.

Apartment List’s approach starts with statistics from the Census Bureau and Department of Housing and Urban Development, and it includes rents for older units and those in lower-income neighborhoods. The company recently introduced a new methodology to identify transacted rent prices used to calculate rent growth rates, which they say controls for price fluctuations during a vacancy.

Kellie Hwang is a San Francisco Chronicle staff writer. Email: Twitter: @KellieHwang

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