These charts show just how extreme the rent declines in San Francisco were in 2020

San Francisco’s housing rental market saw the most dramatic changes among all U.S. cities last year during the coronavirus pandemic, new data shows.

When the pandemic began in March, moving virtually halted across the country. But as job losses rose and workplaces went remote, people started leaving pricey big metro areas in favor of more affordable cities.

The country’s most expensive big city, San Francisco, was the most affected, with rental prices plummeting 26.7% since March, according to 2020 National Rent Report from rental listings website Apartment List. The current median two-bedroom rent is $2,305.

 These charts show just how extreme the rent declines in San Francisco were in 2020

San Jose landed sixth on the list with a 15.2% drop since March and a median two-bedroom rent of $2,035, and Oakland was eighth on the list, declining 14.2% since March and a median two-bedroom price of $1,952. Apartment List estimates the median contract rent across new leases signed in a given market and month.

Rents in principal cities across the U.S., which are usually the largest or have the greatest economic output in the area, fell 9.3% since January, while rents in surrounding suburban cities increased 0.5% since the start of last year. The report reflected a big exception in the Bay Area: Both principal city San Francisco and its neighbor Oakland saw dramatic declines, though Oakland’s was somewhat smaller.

 These charts show just how extreme the rent declines in San Francisco were in 2020

The pandemic also caused vacancies to rise in many large, pricey coastal cities. San Francisco saw a big spike in available apartments, which in turn pushed rental prices down. Apartment List’s local vacancy index more than doubled from 5% before the pandemic to nearly 12% by August.

 These charts show just how extreme the rent declines in San Francisco were in 2020

“In turn, landlords had to drop their prices to attract the renters that were still interested in moving,” said Apartment List research associate Rob Warnock. “This phenomenon took place in many expensive cities throughout the country, but none more dramatic than San Francisco.”

Other cities, including San Jose, Seattle, New York and Boston, had similar patterns. But some more affordable cities saw vacancies decline and rents trend upward, including Fresno; Albuquerque; Boise, Idaho; and Gilbert, Ariz.

 These charts show just how extreme the rent declines in San Francisco were in 2020

Seasonal declines are normal this time of year, but Apartment List found the drop nationally in 2020 was slightly steeper than usual. The national rent index declined 0.4% from November to December, compared to 0.2% to 0.3% from the past three years.

“Rent declines in November and December are not unusual,” Warnock said. “Moving requires a lot of time and money, so during the winter months typically people direct those resources to holidays instead of moving. That said, in San Francisco, this season’s rent drops are steeper than previous years since the market was already in free fall going into this slower season.”

In 2019, rents in San Francisco decreased 0.9% in November and December. In 2020, they dropped 3.8% in November and 2.7% in December.

Another major listings website, Zumper, put out its December rent report this week. While its methodology differs from Apartment List in favoring newer apartments available on the market, it also showed major declines in San Francisco rent prices. In fact, the median one-bedroom price in San Francisco was $2,600, the lowest on record for the metro area since the company began collecting data in 2015. The previous low was $3,270 in February 2017.

But recent months show signs of the decline easing, and Zumper analyst Neil Gerstein said drops might be in the 0% to 2% range rather than 3% to 5% range moving forward.

“Decreases have certainly slowed in San Francisco and in the Bay Area in general,” Gerstein said. “We generally believe decreases are slowing because there has been an increasing number of new renters coming into the Bay Area — hopping on unheard-of deals — to replace those that have left.”

According to Zumper’s Bay Area Metro Report, San Francisco again tops the list of most expensive cities, while Milpitas came in second with a median one-bedroom rent of $2,630, and Cupertino in third with a rent of $2,510. Vallejo was the cheapest, priced at $1,390, Concord second-cheapest at $1,700, and Richmond third at $1,740. Even so, Milpitas has the fastest rising rent in the Bay Area, going up 10.5% year-over-year.

 These charts show just how extreme the rent declines in San Francisco were in 2020

Nationally, some of the normally priciest rental markets have dropped out of the top spots, including Seattle and Miami. Cities such as Santa Ana and Providence, R.I., surged ahead of them in rental prices, according to Zumper. Very expensive rental markets such as the Bay Area are still pricier than some fast-growing cities, but that could change.

“If trends continue, then we could see some California cities overtaken by fast-growing cities in terms of price,” Gerstein said. “Newark, for instance, is only $70 cheaper in one-bedroom median rent than San Diego as of last month, meaning that Newark could soon overtake San Diego.”

According to Zumper, San Diego’s median one-bedroom rent is $1,800, while Newark is at $1,730.

While some people who have left big cities won’t come back, Warnock said that when the economy rebounds from the pandemic, new residents will move in, especially since prices have declined.

“Just because people will be working remotely does not mean they won’t demand the amenities of city life,” he said. “So I think the future of remote work includes plenty of workers living in cities, even if they are working for companies headquartered in a different city than their own.”

Warnock said because of the seasonal effect on rental prices, he thinks rents will stay low at least for the next few months.

“Local prices won’t come back up until there is a notable influx of new residents, which of course depends on the pandemic getting under control and job centers opening back up, and it’s hard to say exactly when that will happen,” he said.

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

Article source: https://www.sfchronicle.com/realestate/article/These-charts-show-just-how-extreme-the-rent-15848320.php

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