Rent prices in San Francisco plummeted to historic lows in December, but the Golden Gate city is still the most expensive city in the country for renters, according to a new study.
The average one-bedroom apartment on the market in San Francisco cost $2,700 in December, its lowest rate since San Francisco-based online rental listing site Zumper began tracking rental price data in 2014. But $2,700 is nothing to sneeze at — even in New York City, one-bedroom rent prices were a median $2,470, according to Zumper.
“Nationwide, we’ve seen migration out of expensive rental markets to often cheaper, neighboring places. This rings very true for San Francisco,” said Neil Gerstein, data analyst at Zumper. “But the prices in the San Francisco rental market were just so much higher than in other places when all this started [that it’s] still the most expensive rental market.”
One-bedroom rent prices (median $2,700) were down 3.6% from November and down 22.6% from the same time last year. And two-bedroom apartments cost about $3,570, down 3.3% from last month and 20.7% from the same time last year, according to Zumper.
“Renters are seeing that the premium they pay in San Francisco and other big cities is not worth the money anymore,” Gerstein said. “If they’re not commuting to a downtown office, why pay rent for such a small space?”
Tech workers flocking city
But the gap between San Francisco and New York City asking rent prices narrowed during the pandemic. San Francisco asking rents, down 22.6% compared to last year, outpaced discounts in the Big Apple, where asking rents are down only 16.8% compared to last year, as landlords tried to lure residents.
Demand for San Francisco apartments sank more than other places during the pandemic as tech workers, now untethered from their offices, look for larger homes with yards in places like Sonoma, Sacramento, and Los Angeles, according to Zumper.
“San Francisco is a bit more tech heavy in the labor market than New York… Most tech companies in the Bay Area have created permanent work from home policies. The disproportionately higher share of tech workers has allowed people to maintain jobs but leave the area,” said Gerstein.
Rent prices in San Francisco are expected to slide between 1% and 3% monthly into the beginning of next year before stabilizing in late 2021. As the economy recovers, rent prices could even begin to grow — slowly — about 2%-3% annually. But San Francisco’s slow recovery hinges on the delivery of a vaccine and the end of the novel coronavirus pandemic.
“It is my opinion that prices won’t skyrocket back up to the level they were pre-March this year. We will hopefully see the economy return to normalcy next year when this event subsides, so I think we will start seeing people move back to San Francisco at higher rates and [that will] have a positive effect on prices,” said Gerstein.
Sarah Paynter is a reporter at Yahoo Finance.
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