San Francisco apartment rent prices are dropping fast | Hacker News Reader

San Francisco apartment rent prices are dropping fast

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280 pointsundefined1399 comments

I'll add to the anecdotal evidence.

I live in Denver and just resigned my lease without much in the way of increased negotiation power. I run into two main issues here:

1). Extreme information asymmetry. While many of the properties are owned by different investors, many of those same properties are managed by a significantly smaller subset. Those property managers have a cartel like effect. For instance, they can strategically hold back supply to keep a rent floor and 'establish' extremely draconian lease terms under the guise of 'market forces.'

2). Draconian lease terms. This is a subset of the 1st point, but it's extremely difficult to price the market when you're required to give (move-out) notice well in advance of the actual lease date. Because the market here is so fast, you're basically jumping in blind-folded at what might be available when you go to look for a new lease. Great for landlords you can fill a spot in a moments notice, but horrible for a tenet who's trying to understand the cost of such a decision.

My understanding is that these price crashes are largely happening in the VHCOL (very high cost of living) like NYC and SF. One of the dynamics at play in the VHCOL cities is that the rent is so expensive that the cost of moving, even if only for a few months, is fairly trivial in comparison. If you are paying $4k for a 1-bdrm apartment, packing your stuff up, putting it in storage, and moving into a short-term rental in a lower COL area is likely to be net positive in term of cash flow. Financially, this make less sense in more moderate COL areas unless the pandemic/lockdown goes on for much longer, or if you can work remote permanently.

So cities like Denver and Austin are probably not seeing as much outmigration, but are also probably seeing some immigration from the VHCOL areas.

Just a friendly FYI, the opposite of immigration is emigration.

For extra confusion, immigration and emigration are homophones in a Southern accent because of the pin-pen merger: https://en.wikipedia.org/wiki/Pin–pen_merger

I've never heard the two sound different in any dialect and I'm not from the south.

Makes me think we should pronounce emigration ee-mah-gration.

Out-migration (with a dash) is fine:

https://www.dictionary.com/browse/outmigration

It seems subtly different (and more correct) to use outmigration, based on what the definitions here suggest. Emigration seems to suggest leaving the country, whereas outmigration seems to suggest leaving for a different part of the same country.

Are month-to-month rentals common in these areas? In my experience, renting an apartment in SF almost always required signing a 12-month lease.

In the case of a lease, you can’t just skip town for a few months to save money.

Every lease I have signed converts to month-to-month after the initial 12 month period. From my understanding, that is pretty common. The only places that I have seen that require 12-month renewals are the newer buildings with professional management. But that is just my anecdotal experience. Another thing to consider, the lockdown has been going on for over 3 months now, so 25% of the population that was locked into a 12 month lease has hit the end of their lease term at this point.

Also, there have been some reports of record amounts of lease breaking. Considering that that behavior was probably close to non-existent before the pandemic, the 'record' amount is probably only a few % of leases at most. But it kinda makes sense. If you have access to free or cheap housing (i.e. staying with parents/family, etc...), and if that housing has a better 'pandemic quality of life' (i.e. more square footage, access to outdoors, etc...) than breaking your lease is somewhat rational. Worst case, they force you to pay the remainder of your lease. Best case, they re-rent it or let you get out without paying. Either way, your are improving your QOL, and you are not any worse off financially then you would have been if you stayed in the rental till the end of your lease.

It's pretty common in my experience for landlord in areas with many students to require renewing for a full year, because the rental demand is so spiky. (In Urbana IL, a college town, everything ended 8/1 give or take with absolutely no hope of a part year renewal, here in Cambridge 9/1 is quite common even though there are a good number of working professionals here too. )

> 2). Draconian lease terms. This is a subset of the 1st point, but it's extremely difficult to price the market when you're required to give (move-out) notice well in advance of the actual lease date. Because the market here is so fast, you're basically jumping in blind-folded at what might be available when you go to look for a new lease. Great for landlords you can fill a spot in a moments notice, but horrible for a tenet who's trying to understand the cost of such a decision.

What do you mean here? Just that trying to avoid a month of double-rent means you lose negotiating power cause you have to pick something quickly enough to set up the move and be done in 30 days?

I would absolutely not give up my current market without having the next one lined up, but yes, this means if I'm moving purely to save money, I'm going to have some overlap. But usually I haven't had to have more than 2 weeks, thanks to non-immediate move-in dates.

Just to be clear, I think move-out notice is only one area where landlords use economies of scale to their benefit. Anywho...

If you're looking to price the rental market and you have a 60 day notice, you're probably look at rentals that start 60-90 days out. In a hot market this is an extremely small cohort. If you're required to give 30 days notice that range can extend from 30-90 days, capturing significantly more options.

The net effect here is that tenets lose leverage. In a 30< day model I can look significantly wider without wasting time. in a 30> day model I run the risk of exhausting my runway (and probably taking the first option available).

This is where regulation helps. California requires that notice periods equal rent periods at a maximum. So if you pay rent monthly, you can always ditch a place with a 30-day notice. So you don't get landlords flexing their power by demanding 60-day notices because the government, so dysfunctional in many ways, was effective enough to protect the tenants.

I find most landlords aren’t willing to push back the move-in date on a new place more than a couple weeks in SF. So if I find a place to move into in 14 days, I’ll then give my 30 days notice and end up paying double rent for about half a month as you said. I wish that weren’t necessary, as I usually only need a couple days overlap for moving.

When I was younger and living paycheck to paycheck, I couldn’t afford the overlap and would have to give notice and then start looking closer to the actual date... very stressful! I’m sure a lot of people have to deal with this.

> This is a subset of the 1st point, but it's extremely difficult to price the market when you're required to give (move-out) notice well in advance of the actual lease date.

In many jurisdictions that term would be void or ineffective (I don't think it's technically illegal to have such a term in California, but the landlord has an affirmative duty to attempt to mitigate damages by trying to rerent the unit and there only claim of damages would be for the actual period and amount of lost rent, so anyplace that has a hot market, especially where they can rent both quickly at an an equal or higher rate to a new tenant, there's little meaningful cost to late notice lease breaking.)

Of course, that doesn’t mean the landlord won't demand more, but you can tell them to pound sand, with relevant citations, if they do, and they’ll almost certainly back off.

Tentnants aren't the people who have real negotiating power to drop prices; as a tenant normally the only options are "follow the market" or "offer more than asking price to get a first look".

Panicked landlords are the party with price-dropping power, because their choices are "follow the market" or "undercut the market to get first look".

A landlord might hold out for a few months, but if they are rational and their property isn't tenanted they'll sack the agent.

As a tenant in Australia, I’ve successfully offered less and also even had agents follow up and offer a price reduction, and try and find other properties for me.

It’s all about supply and demand.

The US generally doesn't use 3rd-party agents for rentals, they just advertise on craigslist, etc.

In NYC and SF agents commonly do rentals.

In two weeks I move out of my $2,800/month, 3 bedroom apartment in Boston, MA. We're moving to a lower cost-of-living city.

Our upstairs neighbours, who share a 3 bedroom apartment are also all out. One moved to Denver (job opportunity), the other two are finding a more affordable alternative outside the city. These are young professionals who enjoy a patio and drinks on a Friday.

Our landlord originally listed our unit back at $2,800/month but I see it's now at $2,500/month.

My anecdotal evidence of the shift :)

As high-cost cities that refuse to allow adequate housing to be built force residents out, the jobs are eventually going to follow. Established companies may stay to an extent, but the new ones will grow up in Denver, Phoenix, Austin, and so forth. It's a shift that may be impossible to arrest if or when it really gets going.

Then we'll see thousands of articles about how SF, Boston, and so forth can't pay for the public services the cities want to pay for, and how terrible it is that companies are leaving. Those stories will contrast with the ones we've seen over the last decade, about how companies are evil and driving up the cost of housing.

Edit to add, the other question is eviction. Right now SF appears to have banned eviction: https://sfist.com/2020/06/10/sf-supervisors-extend-eviction-.... If or when that ends, we'll see what the market clears at. I assume courts will eventually forbid an indefinite eviction moratorium, but courts are already willing to go along with rent control, so who knows?

This is a dream that we've been hearing for decades and has never materialized. We have consistently seen cities like Boston and San Francisco survive and thrive despite their central industries fading or collapsing. New industries just take their place. Why? Well one very reasonable explanation is the quality of the workforce [1]. These areas are highly educated and there has always been a large amount of skilled workers, probably due to the density of high quality education. I see no reason to believe that this will be the time that the 'Silicon Valley is dying' people will finally be right.

[1] National Bureau of Economic Research paper on Boston between 1640 and 2003 https://www.csus.edu/indiv/c/chalmersk/econ251fa12/glaeserbo...

The biotech IPO bonanza occurring right now is unreal. I think we're entering the next phase of tech if biotech get us out of the pandemic. This should add to SF and Boston cache even more than before.

A lot of existing biotech companies seem to be selling stock too. I wonder how much they can push it, if investors don't really care about dilution as long as they feel like they're saving the world.

People often say the stock market is disconnected from actually funding companies, but it seems like not in this area.

>It's a shift that may be impossible to arrest if or when it really gets going.

>Then we'll see thousands of articles about how SF, Boston, and so forth can't pay for the public services the cities want to pay for, and how terrible it is that companies are leaving.

Good. Stupid should hurt. These cities had 20yr and nearly unbounded money they could have used to become somewhat sustainable. That they didn't is only their fault. And I say that as someone who lives in one of those cities.

Why has Denver suddenly become a spot compared to the rest of the country? I'm not too familiar with what's happening there.

Denver is inexpensive compared to California, Seattle, NYC, and Boston. But it is (relatively) urban, dense, walkable, and bikeable, with lots more bike lanes incoming. It has a mass-transit system of sorts, although it really needs a north-south subway connecting Cherry Creek to Downtown and past the freeway, as well as an east-west subway along Colfax. It has relatively good and sunny weather. The airport is very large and relatively easy to get to. The economy is pretty strong. Taxes are not insanely high. I was looking at it as a possible place to move.

Austin has many of those, but without mass transit, and Phoenix has some, but it's less urban and the traffic is horrible.

Also notable: virtually isolated from natural disasters: no earthquakes, tornadoes, hurricanes, wild fires (in the urban areas), volcanoes, floods, tsunamis, land slides, avalanches, or sink-holes.

Also, climate modelling says that it's going to get wetter which would make its land more arable.

So, good retirement investment.

While I agree that more both north-south and east-west transit lines are needed, the geography of the area makes subways prohibitively expensive. The soils in the area are expandable soils, and run deep. Any subway tunnels would have to be dug much deeper than is typical, down to a depth of year-round consistent humidity and temperature, so not to be destroyed by seasonal soil shifts.

An elevated line would be more feasible (and is indeed in place for some portions of the existing rail lines), but again, you still have to sink your supporting piles deep due to the soil, and that raises the costs. This is why the existing rail transit in the metro area largely follows rail corridors that existed beforehand.

Finally, botched project management has eroded public will to support more rail lines.

I want more transit rail too, but getting it is going to be an uphill battle.

Shhhh, don't ruin it for us.

It's really terrible there, don't move there!

Legal weed, friendly people, crazy nice weather, 30 degrees and people are out in tshirts and boots, outdoor stuff.

It's some kind of hippie Shangra La. We go there when we can for long weekends.

The cooler weather in Denver and huge focus on fitness / outdoors beats the pants off Austin for me on any given day. I do indeed want to be healthier and spend time outdoors!

Others have mentioned it but having lived near there its a great place. Tons of outdoor things to do(Rockies near there, trails everywhere). Clean urban area with many sports teams and restaurants/bars. You want urban living you have plenty of condos/appts. You want Suburban living its there as well. Pace of life is great, not a work-til-you die slog like the bay area. Weather is pretty mild compared to the east coast/mid-west. Denver is part of a larger area called the front range which goes from south(colorado springs, to Denver/Aurora, out to Boulder area and north at Fort Collins). That whole area is booming and could be a major tech hotspot in the next 5-10 years.

It has many of the advantages of the Bay Area (outdoor activities, craft brewing scene, bike paths). Denver and Boulder have very nice, walkable downtowns. Cost of living is lower than the Bay Area or NYC (but Boulder is approaching fast).

I live in downtown Denver and I just want to point out all the good food is spread out across the metro area, it’s only walkable in a very weak sense. There’s also zero bodega/corner store/corner deli/food carts downtown, aside from two 7-11s and a CVS. Boulder has much better food and stores close to where people live.

It's a reasonable facsimile to the west coast urban cultural environment and is cheaper than the big three metro areas. I don't know that there's much more to say about it than that. Portland is en vogue for many of the same reasons.

Probably not the main driver, but it's 2 hours from some of the best skiing & snowboarding in the world!

Pot?

Then it will be "those evil companies came here, drove up rents and then left when their employees couldn't afford it anymore" - because it will never be the city planners fault!

> Then we'll see thousands of articles about how SF, Boston, and so forth can't pay for the public services the cities want to pay for, and how terrible it is that companies are leaving.

Perhaps, but I've also gotten the impression those companies weren't paying that much to begin with. But perhaps it is they were paying a lot, but not nearly as much as they should have been if they weren't able to buy their own legislation?

Because of bad tax policy in California (Prop 13), the biggest source of taxes in California is personal income tax, and mostly by high earners, who are likely employees of these companies. There's already an effect on revenues when the stock market goes up and down, so I imagine companies leaving California would have an even more pronounced effect. Just because corporate tax is low, doesn't mean the money isn't taxed, it'll just be taxed when it's given to employees as salaries.

Additionally, I don't get the impression that companies are able to buy legislation in SF. Otherwise, we wouldn't have policies like Gross Receipts tax, which most of tech companies in SF opposed [0].

In general, I think this obsession with "making corporations pay their fair share" isn't the right way of deciding a good tax policy. We should tax things we want to incentivize as little as possible, and tax things we want to discourage as much as possible. Maybe that leads to higher corporate taxes (I suspect it wouldn't), but the mindset should not revolve around trying to get a pound of flesh. Additionally, it isn't even guaranteed that the tax burden will fall on the corporation just because they're the ones writing the check. So even if our goal is "make corporations pay", tax incidence can just lead to us making labour and customers pay instead.

[0] - FWIW, I don't think gross receipts is not a very efficient tax, since it just encourages vertical integration and discourages multiple companies working together; ie. less competition. Unfortunately, Prop 13 prevents the economically efficient and fair source of revenue

> FWIW, I don't think gross receipts is not a very efficient tax, since it just encourages vertical integration and discourages multiple companies working together; ie. less competition. Unfortunately, Prop 13 prevents the economically efficient and fair source of revenue

They could just use VAT, which gives no advantage to vertical integration.

I am thinking that forcing tens of thousands of employees to show up at office buildings and live in apartments is somewhat ridiculous, especially considering issues like food. Duplexes and fourplexes are probably a good compromise.

On the flip side, I live in a very rural valley in North Central Washington State that is a prime location for climbing, skiing, mountain biking, etc. We are about 4 hours from Seattle in the summer when the pass is open. Housing prices have spiked in the last 6 months with many going pending in a day with cash offers. It was never like that before. The good builders are already booked through 2022 for new construction.

There are companies like Factory OS: https://www.nytimes.com/2018/06/07/business/economy/modular-... or Build Atoms: https://www.buildatmos.com/timetobuild that are supposed make rolling out new construction much faster and easier, though I don't know what their practical impact is right now.

People are moving out the city (or getting second homes) - that is exactly the trend you are seeing. The urbanization tide has reversed. For how long? Who knows...

I've been watching a number of different markets and it's crazy. In Flagstaff and Chattanooga, for example, many houses get offers within hours of being listed.

Millenials are demographically numerous and are also now bunched in the "make a family or don't" slice of time. Unless someone makes $300,000 or more a year, as almost no one does, that's very difficult in California, New York, Boston, and increasingly even places like Seattle. COVID may be accelerating preexisting trends and pressures.

Do you live in Winthrop?

Between Winthrop and Mazama

>Our landlord originally listed our unit back at $2,8000/month

With a landlord demanding rent that high, how could you NOT move? :) Either way, this gives me a flicker of hope that maybe I can negotiate my rent down a bit this year.

3 bedroom at that price isn’t crazy for a big city. It’s actually pretty low cost.

Though, in the Midwest you could have a mortgage on a five bedroom house for that amount.

And it's all relative. $2800 isn't crazy for a one bedroom in the South Bay Area, and rents have hardly moved so far down here.

Depends largely on the city. A few years ago, I owned a 4 bedroom, 2400+ sq. ft. home in Houston for less than half that per month, and it doesn't look like prices have gone up much (there) since then.

Yeah, that's only slightly more than my roommates paid for a 2 bedroom in LA.

A decent 3br in SF would be at least 2-3x that.

Called out for my two typos in separate posts :facepalm:

My apartments reached out to me to offer same price lease which has never happened before in any apartment. Good luck!

Ask for a slight discount.

Can I ask are you staying in the Boston suburbs or moving out of state? (the suburbs are not exactly cheap!).

Very little around the Boston metro is "cheap" but move 45 minutes to an hour out and prices can be a lot lower depending upon the town. Of course, you no longer have anything resembling urban amenities even if you're still in range of a day or night in town.

Sine I'm European, when you say urban amenities, what exactly are you referring to? Here our biggest problem with moving out of the city center tends to be the lack of sewage system so you have to pay to truck your tanks away which can get costly( and septic tanks are illegal).

Walking to places, transit, good restaurants, etc.

I don't have town sewer but I have a septic system (tank and leach field) and that's pretty normal in more rural areas. I'm not sure I've ever heard of someone with a cesspool that needs to be pumped on a regular basis although I'm sure that exists. Septic tanks should get cleaned out now and then too but that's an every few years thing.

I do also pay for trash disposal and some things like that which are paid for by taxes in most cities but that's hardly a problem.

We're moving to Halifax, Nova Scotia (We're Canadian citizens)

What's a LoC city?

Oops, fixed. I was half-focusing on something else while writing my post. Meant to say "lower CoL [cost of living]" but .. that came out!

< $2000 per month.

I think some of this is temporary. My friend just left NYC. They loved it there, but since everything is closed, there was no reason to stay. The bars, clubs, and restaurants were the main reasons they were there.

They figured they might as well save money and move back home with their parents until everything opens again. Then they'll probably go back.

I suspect things will pick up in SF as the bars and clubs and restaurants open again.

Real estate is priced on the margin. So if 1% of the people don't come back, prices will probably fall more than that 1%.

If 10% of the people don't come back, then prices may fall 40%.

It's a tough game things like this happen. My feeling is that we haven't even begun to see the beginning of this.

And if prices in NYC fall 40% then there will be a stampede of people moving back pushing things back up until an equilibrium is reached.

Only if the wealthy tenants come back. The biggest driver of real estate prices in general has to be the top 5-10% of income

I live in NYC. The number one reason people I know leave is affordability vs the suburbs or next tier cities. I know a handful of people who aren't/weren't cut out for life in the Big Apple. The vast majority would stay if they thought they could. If you think we are in a world of permanent pandemic then yeah things could really change. If you think 12 months out things mainly normalize then lower prices will definitely draw people back in and re-establish equilibrium.

When you live in a city, there’s an unspoken agreement between you and the city that you’re paying for access to amenities and services that would be hard to get in the suburbs. It’s an unspoken agreement since “the city” isn’t actually a party that you can negotiate with.

During the pandemic, this agreement has been broken, which has created a feeling of being cheated out of an agreement (despite the caveats above). It’ll be interesting to see if people will be excited to return to normal once this is over, or if people will re-evaluate whether they’re getting a good deal.

Were people really living in the city for the recreation? I always thought most people either lived in the urban core for work, or because they're from the urban core and used to it.

But then again, I suppose I'm biased by living in Boston, which... kinda hates fun and wants to make sure you go home early.

All my evidence is anecdotal of course, but in 20+ years of working in the Bay Area, I've asked maybe 30-40 people who live in SF and commute, why the do so. Most of them were young single people (or young couples) and enjoyed the cultural aspects. They were happy to endure long commutes (often on company shuttles) just so they could enjoy those things on nights and weekends.

When I worked in SF, one left the city when they had kids, and one bought a house, but they just enjoyed urban living, being able to walk places, have lots of services nearby, etc.

A few were part of a family where their kids were born there and were in school there, or the grandparents were nearby.

San Francisco has the lowest percentage of kids of any major U.S. city. 13% under 18 vs 21% in NY and 23% in Chicago.

This was particularly eye opening: “For every 100 apartments in the city sold at market rates, the San Francisco school district expects to enroll only one additional student, the report said.”

https://www.nytimes.com/2017/01/21/us/san-francisco-children...

personally I live in SF and commute because when I'm at home I want to be able to get around on foot and transit. also I like the feeling of living in a reasonably dense area.

I moved to a medium-sized city primarily because I prefer being in a medium/large city. I've always worked remotely, so I could have stayed in my small town with a very cheap cost-of-living.

Reasons I moved:

  - restaurants
  - bars
  - concerts
  - larger dating pool
  - greater LGBTQ acceptance
  - close proximity to international airport
  - can walk almost everywhere
  - I find most american suburbs to be depressing

So, the virus has wiped most of those amenities out. Living in the city is a lot less fun now.

Ok, so what I'm getting from the extended responses to this thread is that I need to get the hell out of Boston, because I've just been doing it wrong for all of my late 20s and into my 30s.

If you don't feel you're getting those things in Boston, I would consider it. I'm in Denver, which is somewhat similar to Boston in size, and Denver definitely is not a 24/7 city like NYC. But I'm OK with that. I grew up on the east coast and I do prefer the culture of the western states more.

I am in my mid 30's and moved here about five years ago and I wish I had done it in my 20s. I hope you find a place you can enjoy!

San Francisco has great restaurants and food, and I'd argue that "from the urban core and used to it" basically just means "I enjoy having these amenities like nice restaurants to go to".

Lots of reports on the food getting much worse over the last decade. Turns out cooks cant afford to live there, so you have to start scraping the bottom or hiring people with no training to just make salads.

Yes, we had such nice restaurants in Brooklyn when I was a kid. They served syringes and cheap pizza.

I still love living in the city. Wouldn't move to the burbs if you paid me.

All of my young, single, and educated friends who previously lived in low cost of living areas (eg more rural areas or smaller cities) have moved to major cities within the last few years. All of them cited lack of things to do, highly suboptimal dating environments, and / or lack of pre-existing friends nearby as prime motivations for their moves.

Yep. I moved from my rural hometown to a small city after college (still work in my hometown, which is nice as I've got friends there and can stay at my parents any time I need to), but I'm already wanting to move again to somewhere bigger where there's just more to do.

They cited suboptimal dating environments so moved to The Valley. What?

A lot of tech workers endure long commutes to other parts of the Bay Area from SF because they wanted to live in SF so badly. I'm sure it's a lot less attractive now because everything is locked down.

Definitely! I moved to Chicago specifically to work remotely and enjoy the restaurants, art, parks, etc. It may be a generational difference but many of my peers have done the same.

Yes, work, network, recreation and to get laid. Then you move to the burbs so your kids can have a yard.

You move to the burbs because it's cheaper and kids are expensive.

Lot of young people like to live in cities like SF and NYC especially for a vibrant social/recreational life. SF also attracts outdoorsy people because of its access to nature like beaches, hiking spots and so on.

If you really care about the outdoorsy stuff you're better off in Marin or the south end of the bay.

It has been said that San Francisco is a retirement community for twenty-somethings. Without Zeitgeist and Boogaloos, what's the point really?

"College for adults" captures the feel a bit better imo. (Wife's phrase.)

As a 100% remote employee living in the NYC FiDi (and now not planning on renewing my lease), I'm there most definitely for the recreation

Why live in FiDi if you're here for recreation though? It seems like a pretty dead area outside of office hours? Thought I admit I haven't spent much time there.

Of course they do.

I once met someone who was a lawyer who lived in Manhattan and worked in Princeton, NJ so his daily commute was Subway to Grand Central, Train out to NJ, bus to his work.

And look at all the people who live in SF and commute out to the South Bay for work.

Personally I'd never suffer that kind of commute and I live in Manhattan precisely to get my commute to walking distance but to each their own.

NYC is open 24 hours a day.

Miami closes at around 2AM (generally).

It's night and day.

NYC is open 24/7 on paper. In reality, I was surprised to find the nightlife at night very poor. Except few bars/restaurants and McDonald's, there are few people. But maybe I was spoiled from Bangkok, Tokyo and the other Asian cities who are hardcore at staying late.

Yeah, Boston wants you to be going home at 12AM, when the last trains are leaving their stations, and they force bars/clubs/restaurants/etc to be closed by 2AM, period.

It makes me miss the random industrial city in another country I lived in for my MSc. Admittedly, that's one of my favorite cities period, but it had night-owl bus lines, including BRT. You could go out at 20:30, stay out until 04:30, and get home at 5:45.

> NYC is open 24 hours a day.

The Vegas strip is open 24h. NYC isn't.

Miami (FL) doesn't close. When I lived there not long ago, there was a period where I was between jobs where I came home after sunrise every day of the week. If you're trying to stay out past 2am in Miami and not able to, you're not trying... at all. Bars/clubs usually close at 5am, but I believe are only required to close for 1 hour a day, so there are afterhours spots.

Source: Native Miamian.

DC used to close at 6 pm. It was amazing.

There are also people who lived in suburbs or small towns and hated every minute of it. I personally know quite a few like that.

I live in SF and before covid used to commute outside the city. Maybe I'm an outlier (or just in my late 30's...) but the reasons I live in SF are actually better with the lockdown: I love walking and biking the neighborhoods, I love Ocean Beach, Glen Canyon, and Fort Funston, Crissy Fields and the Embarcadero, the Presidio, biking across the bridge. This city has so much to love that has zero to do with bars or restaurants, and after 10 years living here, frankly I'm tired of paying the premiums all those activities entail.

A few single people I work with in the Bay Area moved back in with their parents and terminated or did not renew their lease, some even left the US temporarily to return when things are back to normal.

Another factor to consider is that many people move to a big city for work and higher earnings.

There will probably be some shift back, but I think after all this remote work will be a more permanent option for a lot of roles.

If you're able to get the same higher salary, but remotely somewhere with a more affordable cost of living, and aren't in that area specifically for in-person amenities, why wouldn't you?

My point is that most of the people that live in the city do it for the amenities. The people who are in it for the higher salaries tend to commute from cheaper places nearby.

Amsterdam too.

My landlord tried to retroactively raise the rent on me during the COVID crisis, so I got pissed off and rage-browsed the rental web sites, and found a great deal I couldn't refuse:

I just moved from a 1 floor flat to a 4 floor house with 90% more space, backyard garden on a canal, an indoor garage (for bikes and storage since I don't have a car), near public transit, for 20% less rent!

They had to lower the rent 500 EUR a month to compete with all the AirBnB's that were suddenly dumped on the long term rental market.

My previous butt-hole landlord was shocked I was leaving on such short notice, and apologetic for the dick move that he tried to pull, and asked how he could convince me to stay, because he liked me as a tenant. I told him he'd have to at least give me the entire flat upstairs for free, to even get in the ballpark, and anyway it was a moot point because I'd already signed the contract.

Now I am much better prepared for the COVID crisis to last an indefinitely long time, and actually have enough room to get a chest freezer for the garage, for cooking and eating at home, and set up a big separate office instead using my bedroom, for working at home.

Interesting point about the AirBnBs. Do you know if anyone has looked into this effect closely?

Seems like for all of the horrible damage being done by this disease, both physically and mentally, there are some silver linings, too.

Nice playa

I have no interest in attending Burning Man.

If you are trying to rent right now the going rate seems to be 2 months free for a 12month contract. So almost 20% off.

I think the reason for the 2 months free is to avoid various rent controls. If they actually gave 20% off they couldn't put the price back up 20% in the future as easily.

Regarding SF rent control: this commenter sounds like they know what they're talking about and say that landlords in SF cannot beat rent control with temporary free rent offers: https://socketsite.com/archives/2020/06/complimentary-rent-o...

They're wrong. The new rent control law (effective Jan 1, 2020) specifically excludes temporary discounts from the base rate calculation. See section 1947.12:

https://leginfo.legislature.ca.gov/faces/billTextClient.xhtm...

This is a state law and it still allows for stricter city level rent control. If the unit is bound under the stricter SF city rent control, the city rent control law may treat discounts differently?

SF does not count discounts in the base rent: https://sfrb.org/section-372-definitions

The state law does not apply to units that are rent controlled by existing city ordinances.

That doesn't really govern SF rent control. This clause does not override San Francisco's limit, which applies to all pre-1979 buildings and which limits annual increases to CPI inflation. Under SF's program "A rent reduction is permanent and cannot be restored if a new agreement is created between the parties at a lower rent due to market conditions."

Note that SF-style rent control was outlawed statewide in 1995 by Costa-Hawkins. Only cities with existing program at that time can continue them.

Discounts like a free month of rent are not considered a rent reduction for base rate calculations:

https://sfrb.org/section-372-definitions

> landlords in SF cannot beat rent control with temporary free rent offers

> specifically excludes temporary discounts from the base rate calculation

I think you two (three, including "this commenter") are in agreement…

No, we're saying the opposite. The first commenter is saying that the free months of rent would lower the base rate.

The second commenter (me) is saying that those discounts don't count towards the base rate.

SF does not include temporary discounts in their base rate calculation: https://sfrb.org/section-372-definitions

I actually think that the tax treatment differs as well - the 2 months free can be treated as a marketing expense, whereas the reduced rent simply results in the lower revenue.

For financed buildings it also keeps the nominal value of the building at the same level - it's still technically "rented" for the same rate, keeping future cash flow projected the same.

At least in my jurisdiction the free months are averaged in to the rent control so in the second year the rent will actually decrease.

Exactly. It's not 20% off. Make them drop the monthly rent by 20%.

That is 20% off.

Drop rent control and they might.

Even without rent control, the "2 months free" offer earns them more revenue, assuming you stay over an year, so I doubt they would just give you the full discount.

Or if you stay less than a year! Since you usually have to pay back concessions ON TOP of any early termination penalty, if you want to break your lease.

Let the place remain tenantless few more months and they will.

Seeing lots of evidence indicating that prices are falling in cities and it’s very hard to sell.

Meanwhile in the suburbs around cities the market is booming in certain segments. Lots of people who vowed they were always city dwellers are suddenly keen to live in the burbs. Hearing lots of stories of houses in desirable suburbs getting multiple competitive offers the first day they go on the market.

In the rental space in suburbs and vacation communities heard lots of stories of places being rented at above market prices sight unseen by people just looking to get out of the city for the summer/year.

Things will probably pick up in cities once things start to return to normal, but like a lot of things it’s likely going to be a very long time before things get back to where they were before all this started.

That seems to be the case in Seattle.

Apartments in the city center are desperate to sign leases. But houses are actually a little more expensive this year, and they sell within a few days of hitting the market.

And it make sense. New urbanism is dead at the moment: parks, cafes, and theaters are closed. There are no events. Nobody wants to take transit. But in single family neighborhoods, life is basically normal. Not to mention there is no traffic and gas is dirt cheap.

For what it's worth, I recently moved apartments in downtown Seattle and the there's little in the way of downward price movement... yet. I shopped around at most of the buildings down here (2BR prices) and didn't find too much in the way of desperation, but this is all anecdotal I suppose.

We stayed downtown for my wife who supposedly would be "back in the office" later this year (she doesn't drive), but I really wish I had gone with my gut and pushed for us to move further out. There is absolutely no benefit to being in Seattle proper right now, and it would not surprise me to see more people leave (I've considered just becoming rent-responsible on the lease and eating the cost, it's annoying me to death).

(If you're talking about anywhere near Cap Hill, nobody wants to sign a lease there after they tear gassed the entire neighborhood a few weeks ago)

Also because, you know, a goodly chunk of Seattle was ransacked, covered with graffiti, riddled with gunfire, responsible for at least 5 shootings in a month, looted, boarded up, and deprived of any protection at all.

This is needlessly dismissive of why those events occurred to begin with. SPD themselves (as evidenced by numerous videos) caused more than enough of the anguish and problems, and Durkan's actions speak for themselves.

There are many reasons to not want to be in Seattle right now, but casting it as a warzone without "protection" (from the very aggressors themselves) is a bit much.

What about the rampant homeless and drug use problems that predated all of this?

Low interest rate is driving house deals these days.

Where I live, it is _noticeably_ cheaper to buy a house in a suburb 20 minutes away from the city center, than renting an apartment half the size, that would cut such car trip by 10 minutes. Given the current situation, it's a no brainer.

It's not hard to sell. There are so many buyers out there right now. In Chicago houses are on the market 3 days tops. Hearing similar from other cities.

Same in Providence. We are house shopping right now and the market is very hot -- so hot that I'm considering stopping our search altogether on the theory that it might be better to wait and see what happens over the coming months.

I remember reading an article that said, while people who want to buy really want to buy, many of the sellers have gotten cold feet. When people imagined that the market would dry up and property values would go down because of the epidemic, they weren't thinking about the asymmetry.

I think this is right. It's called supply and demand. Both parts matter.

I watch SF rents like a hawk. A decent 2ba/2br is $~4200 which is lower than a year ago. Also! I am seeing apartments come on the market - that haven't been on the market in 10 years: Views, custom kitchens, 1200 sqft, parking (wtf??). A handful of listings are starting to give out 1 or 2 months free (this is because they can't lower the rent due to rent control issues). But if you are looking in SF - grab something that hasn't been on the market for a decade - these are unique treasures.

Random example:

https://sfbay.craigslist.org/sfc/apa/d/san-francisco-green-j...

It is furnished so you can't claim rent control [not a lawyer - but they wont win]. But a true SF gem (the view is everything).

What do you use to skim listings?

Not the poster, but I do identical surfing in NYC and use Zillow. It’s all about the right filters (posted in last 24 hours, prices, neighborhoods, amenities). You can set up email updates, but it’s more tedious to read the emails than it is to browse their app.

My anecdotal data in NYC is identical, btw. I used to see a great apartment maybe once a week. Now, it’s closer to 5-8 per week. And they’re all “under” priced by 10-20%. I saw a rent-controlled parlor floor brownstone in Brooklyn heights recently. It’s unreal.

It’s just a bit sad to think how many of these households were lived in by actual victims of the coronavirus.

I live in the Bay Area and this has not been my experience. Looking at Craigslist and Zillow the rents are stable. Perhaps the rate of increase has slowed down slightly. That is all.

Yeah as i stated above if you're actually looking call them up and they'll suggest 1-2months free. Source: I'm looking right now and pretty much everyone will say yes to 1 or 2 months free. They just don't want to drop their listed prices. Perhaps to avoid renewals in the same complex citing the lower prices and negotiating or perhaps to avoid rent controls locking in rates when this ends.

Are you looking mostly at large apartment complexes?

This is not the case with single family homes for rent - as far as I can tell. The single family homes and in-law units are vanishing as fast as they ever have in the desirable areas.

Yes. Also i think you're right there. Everyone's moving out from the more central areas to houses in the suburbs.

Are you in SF?

I just left a place where the landlord wasn't able to find anyone to replace me with two months notice and a 20% reduction.

Lots of places aren't reducing the monthly rate outright, but are giving 1-2 months free. So a $3100 rate would actually be $2841 or $2583. This benefits them because it affects property valuation. There's other factors involved too, but this seems like the primary one.

Agreed. I (unluckily) signed a new lease in March, not thinking this was going to go on for quite so long. Before I actually moved in, I was able to negotiate a free month, but it looks like my building is now offering 6-8 free weeks, but the base rent hasn't actually changed.

What happened to San Francisco is that public transit is vastly degraded, and you can't use the bathroom at most private businesses, even if you buy something. Thus, you are leashed to the bathroom distance from your house. Thus, you must drive everywhere, which makes city living much much less attractive vs. being in the suburbs. Add to that that remote work is the norm now, and there seems to be a higher crime rate in the cities with all the rioting, and living in the suburbs makes a lot more sense.

Having lived in SF for 10 years, it's really easy to use the restroom, there are plenty of public restrooms as well... Not sure where you lived.

The parent comment is referring to conditions that have changed due to COVID (most businesses close their bathrooms now), not how available bathrooms were historically.

Last time I was in San Francisco I noticed the entire city was an open bathroom :)

Open bedroom, open bathroom and beyond.

“300 landlords who own more than 10,000 apartments”

Wow, that’s allot of concentrated wealth. Anyone have some insight on these fine folk?

If each landlord owns 100 apartments renting for $4k each(average) that’s $400k a month gross. That’s allot of potential venture capital money to capture monthly, over $20M in five years.

Something to keep in mind is that once you own a few rentals, it's easy to pull equity out for a down payment on another rental, and buy the rest with a loan. Leveraging is easy when there you are buying physical assets that retain value.

In other words, even if you own 10 rentals, you are probably wealthy, but the bank my still own a majority % of those assets.

The goal is not to own the rentals, the goal is to own the cashflow through the control of the properties (whether that's mortgages, leases, or option agreements with the owner). To your point, you want to be stripping equity whenever possible to accelerate asset acquisition. Very similar to private equity LBO operations.

If you're highly levered (as a smaller landlord), and funneling that income into retirement accounts protected from creditors (varies by state for IRAs, 401ks are federally protected), it's all upside with no downside. Heads, you walk away with appreciated real estate you eventually cash out of. Tails, you walk away from your investment properties while your retirement assets are protected with credit blemishes that are quickly forgotten by lenders. It is rare to be pursued by lenders in recourse states, as being (mostly) judgement proof and the option of bankruptcy are significant hurdles.

> you want to be stripping equity whenever possible to accelerate asset acquisition

By "stripping equity" do you mean taking out home equity loans whenever possible? Or are there other efficient ways to strip equity?

Home equity loans or cash out refinances. What you pick is determined by your financial models based on interest rates, origination fees, etc. Typical carrying cost math.

Once you have enough properties to bump up against Fannie or Freddie GSE underwriting guideline limits (~10 properties), you transition into commercial lending, where you build a relationship with a bank and they lend against your combined portfolio.

EDIT: You can find more information regarding these strategies at https://www.biggerpockets.com/

Sure, if they own outright, rather than having borrowed money to buy the apartment complexes, and if they don't have to pay maintenance, insurance, landscaping, and so on.

It's not just free money. They're making money, sure, but considerably less than your calculation.

Not sure how much you know about the SF market. We only get glimpses, but it gives you an idea of how much wealth these landlords capture.

The building at the corner of Fillmore and Waller was bought for $1.05 million, 20 years ago. It has 6 retail storefronts and 18 apartments upstairs. Just one of the retail doors rent for $10000/month, or it did before this rent strangled the tenant:

https://hoodline.com/2020/04/cafe-du-soleil-shutters-after-1...

The building is assessed for $1.4m, so the taxes are around $15000/year (which the tenants pay under NNN terms) but the gross is probably well over $50000/month. And there's no landscaping, obviously.

These people are absolutely stacking cash. They are just parasites.

> They are just parasites.

They are providing a service. You arrive in a new city with no money. Where will you live? The landlord is assuming the risk of owning and maintaining the building and all you have to do it put in a deposit.

The main reason they are "parasites" is prop 13. Without that, their building would be assessed at a reasonable level, and most of their profits would be property tax payments.

If you live in California, make sure to vote yes on the two partial repeals of Prop 13 this November:

https://ballotpedia.org/California_Property_Tax_Transfers_an...

https://ballotpedia.org/California_Property_Tax_Transfers,_E...

Landlords may provide services, but they primarily extract economic rent, essentially profiting from their their monopoly on that particular piece of land.

https://en.m.wikipedia.org/wiki/Economic_rent

They are providing a service in the act of owning and maintaining the building.

What service are they providing in their role as a landowner? Land (in the sense of it being in a specific location) doesn't require any maintenance or risk. It's also not like they created the land.

The majority of rent in SF comes from the land value, so this is the more relevant part to consider.

If you make anywhere near an average IT salary in the USA there are a billion or so people in the world who would feel that you were absolutely stacking cash, and are a parasite.

In the case of the salaried employee, you're earning as a direct result of you doing productive work. You can argue that the pay is too high, the but the fact you have to put in work to earn it means it is at least not parasitic.

In the case of a landowner, they need to put in no such work. They didn't create the land. All of the rent comes from the fact that they have a monopoly on a scarce good that cannot be produced further, and one that everyone needs. See Adam Smith [0] and David Ricardo analysis on rent for more on this (the Ricardo's law of rent is a really neat concept).

Now the fact that land and buildings are rented together complicates this a little bit, but this definitively applies to the rent that comes from the land.

Simply claiming two actions are equivalent because they both lead to lots of money is not a useful mental model. How you earn your money matters.

[0] - "The rent of land, therefore, considered as the price paid for the use of the land, is naturally a monopoly price. It is not at all proportioned to what the landlord may have laid out upon the improvement of the land, or to what he can afford to take; but to what the farmer can afford to give." — Wealth of Nations, Book I, Chapter XI

How could the building you describe be assessed at only 1.4 million? In my city, a single condo that rents for $4k/mo would be assessed higher than that.

I'm so glad you asked. In 1978 Californians passes Proposition 13, written for and sponsored by the Los Angeles Apartment Owners' Association, which says that property assessments may not increase by more than 2% per year or CPI, whichever is less. Property tax rates may not exceed 1% of assessed value. So the max theoretical assessment of a building bought for 1.05 million twenty years ago is 1.56 million.

Prop 13?

I don't understand how you can call providing dense housing being a parasite. The parasites are people with frozen property taxes who refuse to sell their land so that it can be used to build denser housing. After all the problem with the housing market is that there are not enough units for everyone so only the highest bidders can successfully rent an apartment.

Rule of thumb estimate for operating expenses for multi family is 50% (doesn’t include mortgage), and that doesn’t differ much just because rents are high. That means almost everything on your expenses column is more expensive as well.

Don’t get me wrong, real estate is a great investment, just not quite that great.

There are parasites everywhere there’s some cash flow. We need laws to tame these

You eliminate parasitic behavior by increasing competition in an industry.

Maybe rent control? That seems to have worked really well!

Laws created the problem. We need less laws not more.

What do you propose? Take away their property?

You tax all the rent they earn due to holding the land [0], since all the reasons rent is high in SF are not due to contributions by the landowner (ie. the community put in effort to make SF desirable, yet the landowner gets all that value).

See https://en.wikipedia.org/wiki/Land_value_tax and https://en.wikipedia.org/wiki/Georgism

[0] - But let them keep all the rent from the building, since they built it with their own capital and labour.

Take away Prop 13.

Maybe do what Singapore does.

I'm sure there are other good models too.

Sure, they might be raking in now, after 20 years.

And that $1.05M invested 20 yeas ago in the stock market? They would have doubled their money with none of the headache.

I'm pretty sure the building is worth much more than $2m. With 18 apartments, it has to be at least $5m.

Heck, the crappy apartment complex I lived in in the peninsula that was built in the 1960s was worth close to $9m and it only had like 8 small apartments.

Lots of landlords don't pay any of those things.

Lots of landlords don't insure their buildings? Lots of landlords don't pay for maintenance on their buildings? I call baloney.

Anecdotal experience: I rented an apartment where the bathroom was literally rotting away on itself. The landlord would do cosmetic fixes only as the walls sagged and warped.

The incentive wasn't there for her to make a large capital expenditure on maintenance because the land appreciation was what she was banking on and rental demand was such that she could always rent the apartment.

While this example is extreme I've seen similar deferred maintenance behaviors repeated over and over again by the most successful (read: largest portfolio holding) landlords.

The costs you mentioned are associated with the building itself. However, in a city like SF, much of the rent is driven by land value, which has no such holding costs [0]. So they still have a lot of "free" income coming in, as owners of a government granted monopoly in perpetuity (sounds a lot like feudalism...).

[0] - Except property taxes, but CA caps their increase, so if you've owned the property for a while now, the tax isn't in line with the rent you can charge.

https://en.m.wikipedia.org/wiki/NNN_lease

My parents' landlord doesn't. Not sure on insurance but I doubt it. No involvement beyond working on the heater once or twice.

That's nothing. A single individual owns Raj Properties and Everest Properties which together own more than 1000 apartments in the much smaller city of Berkeley.

Technically it's different individuals who own each, because the owner of Raj properties had to turn them over to his family when he went to jail for sex trafficking and slavery.

But when he got out only eight years later, his family "loaned" him a bunch of money to start up Everest properties.

But yes, in reality, he is probably still in control of both.

The whole story is just amazing. I find it sad that our system of justice doesn't have a way to force the disgorgement of gains made from, seriously, enslaving teenage migrants. It's like sure we got our seed capital from sex slavery but the rest of these gains are totally above board. Makes no sense.

Part of the fascination for me is that the Reddy headquarters is this absurdly tacky mansion[1] in Kings County, in the middle of nowhere, surrounded (at arm's length) by abject poverty. Supposedly a branch of the family is the most successful vascular surgeon in Hanford (this makes ~zero economic sense) but the giveaway is that according to public records all of the Raj tax bills are mailed here. So it's really the seat of their weird real estate empire.

1: https://www.google.com/maps/place/1751+Muscat+Pl,+Hanford,+C...

Interesting, I had no idea. It's right near all the Kings county municipal buildings. I wonder if that's relevant.

You can say his name https://en.wikipedia.org/wiki/Lakireddy_Bali_Reddy

A lot of apartment buildings are owned by real estate developers and private equity firms. It's not always one dude that owns a ton of buildings.

Honest question, wouldn’t the 80/20 rule in these cases still imply large majority owners in most cases? Wealth concentration figures I have seen (0.1% own 20% of the nations wealth for example) seem to support this view?

You realize "landlords" are not all individuals? I've lived in a run-down multistory building owned by a stereotypical slumlord, but also in apartment complexes where the people I dealt with were employees of a company that managed it, and other similar places.

Could be REITs.

I hope many of the cities that have seen rapid growth in the last decade get a similar reprieve from the strain of growth. As an example, Seattle has changed in ways that have reduced quality of life - worsening travel times, neighborhoods that look/feel completely different, visible blight everywhere, over-subscribed/crowded city amenities, etc. The culture of the city has also been overwhelmed by transplants, and with it, the old PNW spirit has effectively been smothered. The politics of the city is also completely different from what it was 15 years ago. I'd welcome an exodus here, even if it means reduced a reversal of economic growth/houses prices/etc.

At the same time, I think these changes will be healthy for those who do move out. Some are moving back in with families, and the cultural continuity of multi-generational homes is an important part of human society historically. I also hope it encourages people to discover cheaper towns in the country that have been ignored and left out of the last couple decades' economic gains. Many of those places have a lot to offer, and I bet those who give them a try will be surprised how much they like it. The economies of those areas will also benefit from the boost.

Has anyone in SF successfully Renegotiated rent based on this? If so, would love to hear about it.

I’ve been living in the same apartment for 3 years with no rent changes and feel like it’s time for a drop

We recently renegotiated our rent for a 2br apartment in SF about 7% down after having begun our lease in March. Used a 2 prong tactic of mentioning some frustrations that we've had thus far as well as offering to extend our lease. We didn't have much leverage, but offering something in exchange for the rent reduction was probably what convinced them.

I re-negotiated my 2B2B rent down from $4700 to $4200, and honestly could've gone lower (landlord accepted our first offer).

The most important thing for me in this process was doing the research on comparable properties in the city and spreadsheeting it out (sqft, rent, location, and amenities). I presented that spreadsheet, showing there were obviously places I could move to that were much cheaper with similar to better benefits.

Ultimately all negotiation is about showing that you're willing to walk away for a better alternative, and it's pretty clear there were good alternatives given the current SF housing market.

Trying to do this now. They aren't budging on the rent, but are pitching a reduction to removal of parking and pet fees. I don't know if this is because they fall out of rent control regulations. Was aiming for a 10% total reduction, but they've effectively hit a 4% reduction in my case.

Ugh, they interviewed someone from J.Warvo. That company is scummy. They've been renting out literal shithole apartments/studios for above average prices. But barely respond to tenant needs. I hope they collapse

Most of the SF Property Mgmt companies are what Peter Thiel famously referred to as "urban slumlords".

At my office (working in tech in downtown SF) about 30-40% of employees have moved out of the city. Many plan for it to be temporary (why pay SF rent for the months we are all remote). Some are clearly hoping it will be permanent, but I think the chances of that are slim. I think we are on track to offer a lot more remote options than we did in the past - but I think that in 2021 a decision to stay remote will mean a huge pay cut.

I own rental property in suburbs outside Philadelphia, my tenant's lease was up end of May and demand was off the charts compared to previous years. Only anecdotal, but had multiple people mention they just wanted to get out of the inner-city, but still be close.

Suburbs (around here at least) are a lot more millennial-friendly than people give them credit for. I think as millennials age and get over the "must be in walking distance of a social scene" mindset, this trend will accelerate. I also think the inner-city riots/looting/etc will stimulate this across the US.

Well of course millennials can't afford the inner city, being the poorest generation in modern history. Suburbs are usually cheaper (if you forget to net out transportation costs) so that's where millennials will go.

I agree with you, but I don't think it will be entirely about personal finances. Inner city living is a lifestyle that has high-highs (easy work commute if you work in the city, more vibrant social life, nearby public transit) and low-lows (higher crime/violence, unhealthy air quality, terrible public schools). As the highs start to matter less (social life not as active, remote working more acceptable, etc), and the lows start to matter more (they have kids, etc), I think the natural progression is that they move out of the city.

Philly is super affordable, so your comment isn’t really on point.

The comments here are all about the rental market, but the opposite seems to be happening in the housing market, at least where I'm at in Providence, RI. We're shopping for houses in the city and the price graphs have gone exponential. Seriously, look at the price graph on Zillow for these two places near me:

* https://www.zillow.com/homedetails/25-Brighton-St-Providence...

* https://www.zillow.com/homedetails/5-Alton-St-Providence-RI-...

The first one of those is in a very trendy gentrifying neighborhood. The second is in an adjacent working-class neighborhood. In both cases the asking price has shot way up from a year ago and has totally disconnected from the prevailing trends of just a couple months ago.

Supply is very low. Rates are very low. And the result is that the market is very hot. Every house we look at has multiple offers the next day, usually above asking.

I hope this trend continues, but I feel like after the pandemic ends, prices will bounce back up.

That depends on two things:

1. If companies will extend their remote-friendly policies beyond the pandemic.

2. If the rising swell of unemployed Americans will pursue a career in tech, and enough of them are willing to relocate to San Francisco (as the trope goes).

I don't have a good prediction for the first point (some companies will likely dig their heels in on remote work because "we tried it" even though "remote work" is way different than "working during a pandemic"), but we'll at least see some of the second.

There's a fun potential unanticipated consequence if companies continue allowing remote work for "professional" sorta roles.

Imagine a couple of lawyers working for a firm in Houston making $$$$ who can now keep that same job but live in San Diego and not deal with the same weather... especially, say, if their kids just moved away anyway.

You could conceivably have desirable locations being a new sort of "bedroom community" that only the super-highly-paid can afford, regardless of where their employer is based.

Perhaps for other roles, but much less so for lawyers. For one thing, legal practice is local and involves networking that happens locally.

Additionally, if a lawyer moves to a new state, he might have to take the bar exam again in order to be licensed in that jurisdiction. This applies even if the type of law that the lawyer practices hasn’t changed.

This seems a bit crazy, but I actually experienced this as a California lawyer (practicing federal corporate tax) who started spending time in another state where my girlfriend lived. Fortunately she got a job in CA before I had to take the bar in her state.

1. They won't.

2. Those who were made unemployed were not the same people renting expensive SF apartments.

2. People who are made unemployed by the pandemic who transition into a tech career become recruiter fodder, and will eventually join the candidate pool. That's what I'm talking about, not the sum of all unemployed people.

Maybe, but I think there is already a glut of bootcamp-style developers who represent the majority of career-changing opportunities doing front-end development or mobile development after a 3-12 month training. I don't there there are as many entry-level tech opportunities in the bay area as people think their is. The roles that are really hungry seem to always be senior or cross-discipline devops that requires many years across many types of domains.

> 2. People who are made unemployed by the pandemic who transition into a tech career become recruiter fodder, and will eventually join the candidate pool. That's what I'm talking about, not the sum of all unemployed people.

I really don't think the a significant portion of burger flippers have suddenly decided that a CS degree or pay for an expensive technical bootcamp is what they want to do. As far as I can see, the people losing their jobs are not in the educated class. A lot of them didn't go to college, did go to poorly rated schools, and are underachievers.

Do you think people will move back once the pandemic is over?

Yep, I think the vast majority will. Many companies are allowing remote work for the rest of 2020 with no change in compensation. Once that ends, I'd expect people to come back. I think probably another driver of the decreased rents are the recent college graduates that had no reason to move to SF once the virus hit and everything closed. I'd expect them to move to the city once things get back to normal

On the other hand, there might be a fair number of people who move to comparable but much cheaper locations (and given the insanity of SF, that includes most other major US cities) while still trying to work remote indefinitely.

Yup, I suspect many of those live in SF want to be in a city rather than suburbs, but they're not tied to SF specifically. They just choose SF because that's where the jobs are, and would just as happy in a different urban area.

I moved out of LA the fall before the pandemic, but I’d move back in a heartbeat if there was a vaccine and lower rents.

It ended up being a very smart move for my partner and I to skip town when we did, but we both miss the city every day.

"over", hah. All signs point to COVID-19 becoming endemic within our (US) population, like the flu already is. Even if we develop a vaccine, chances are it would not grant long-lasting immunity, and chances are even better that some significant fraction of the population would refuse to get it for partisan reasons.

Not all of them.

“Zumper has been tracking rent prices across the country for over five years but we have never seen the market fluctuate quite like this,”

Five whole years?!?

Honestly, CNBC couldn’t find someone with more experience than this??

I think SF rents reached their zenith shortly before the pandemic.

Walking around the city you see a lot of commercial real estate signs and for lease signs. Tons of companies and individuals are leaving for good.

If the trend of WFH (forever) continues the rent prices in SF won’t go back up for a long time.

What made SF interesting was pushed out long ago. What's left is an insular monoculture not unlike Cavendish bananas. Unless you've got deep roots there, seriously consider the alternative.

What would you suggest as a few examples to consider? (let's assume there is no covid in place so everything is open as usual) Thanks!

Everywhere else has less monoculture than SF. So just anywhere else in the US. Don’t get me wrong, SF is cool and an easy place to live with the weather and the parks and density level. But the people are as bland and similar as you can get.

San Diego and Austin are two examples that come to mind.

Retail has been dying since about when Amazon got popular, and the exceptions (eg Apple stores) are the ones that prove the rule.

I was mainly referring to restaurants. But yes, if a retailer has no niche then amazon wins.

I am not sure we have concrete data, but I'm really concerned about what this will do where I live: Bend, Oregon, which is more of a destination for the types of people getting out of the bay area.

A gradual influx of people is good, as over time it leads to more of a local talent pool, people starting companies, and that sort of thing.

But a rapid influx might be the last straw for a lot of people who are not working remotely in highly paid jobs. Nurses, firefighters, teachers, police, and so on.

In the past, I think our prices moved more or less in sync with other west coast markets, broadly, but if there's a real exodus from cities, that might not hold true this cycle.

I've been casually looking on zillow. I have not seen rent go down in my neighborhood (NoPa)

Same. I’ve been eyeing Laurel Heights and Marina and I haven’t seen those places dip. However Berkeley has plummeted. It’s the only place in east bay that i would consider because there are a lot of ethnic restaurants. Ethnic diverse restaurants are key for me.

Berkeley is a fantastic place to live! Tons of great food (all open for takeout right now), the music scene was really fun when it was open, great fresh produce available at local markets, and most of what we need is walkable from our place, including BART. Also the weather is awesome compared to the city. It's sunny most days now, and the only annoyance is that it's pretty windy in the afternoons.

We been here for 10 months now, and signed for another year at our currently place with no rent increase. I didn't negotiate (our landlord offered us the same rent), but we have the best working relationship with him that I've ever had with a landlord and that's worth it to me. Also he's open to us modifying the property, which is worth something as well — he paid for ceiling fans to be installed and let me build a big garden in the backyard, for example. The place isn't perfect, but for now and especially during SIP, it's great. I expect if and when we move, we will continue to live in Berkeley.

I think some of this will be in the form of 1 or 2 months free, but it should also be noted that Laurel Heights and Marina are somewhat suburban, so to the extent people are moving away from the densest inner city locations, more suburban neighborhoods might dip less in rent.

Yeah, that's what I'm seeing, however, I've seen a dip in housing pricing drop near east bay BART stations, especially West Oakland and Temescal/McArthur Area

I think the better data point to track would be craigslist and local private facebook groups that represent what someone is actually going to charge then whatever the Zillow marketing spin is putting on it.

Yup. I've seen the same. Rents are soft, but they certainly aren't dropping.

That said, there are distinctive rental markets in SF. The massive 100 unit buildings without rent control are an entirely separate market from say a duplex in the Sunset.

Anecdotal evidence, I was able to negotiate $200 off my $3,300 monthly rent in Los Angeles for a 2 bed / 2 bath 1,000 sqft. I think I could have negotiated $300 off but just went with the $200 off for 7 months.

We haven't signed the new lease and are potentially rethinking of signing since cases are starting to spike again and surrounding areas are looking really attractive for similar accommodations at ~$2,500 monthly rent.

We're hoping to buy a house within the next year.

I'm moving out of my place at the end of July. Gonna do some short-term sublets for a few months, then move in with some friends coming up from South Bay. We've been checking Craigslist daily for weeks now and it's very exciting to see how prices have come down. We're at a point right now where we're holding out on getting a place since we expect prices to continue to drop.

I moved from a $3000 1BR in downtown to an $1100 private room (4br 2ba 3 roomates) in the outter Richmond in SF. There is no reason to live in downtown SF right now with everyone working from home.

Many facebook groups are advertising significant rental decreases particularly for roomate-situations. They're calling it a "COVID discount" but I suspect its going to stick around for awhile.

Yow, $1100 to have 3 roommates? That sounds painful.

A lot of housing in the outer Richmond is comprised of larger 4 bedroom 2 bathroom units making it not that cramped of a situation.

That sounds very reasonable.

It’s what my kid pays to roommate with other students in Menlo Park.

World's smallest violin plays for all the landlords and homeowners who may no longer benefit from the Bay Area's absurd restrictions on new housing

In all seriousness, while I welcome the new openness to remote work, what I'd love to see is a push towards something in the middle: distributed offices.

Rather than having to choose between moving to ridiculously expensive SF, or working from home in their current city, employees could go to their local coworking space.

They'd get the benefits of an environment more conducive to productivity, away from the distractions of home, and the mental health benefits of social interaction. I don't think that making a huge shift to working from home is good for the already prevalent issue of loneliness.

Plus, having coworking spaces spread out within the city itself means that even if your company is headquartered in your city, you don't have to make the long commute to HQ if there's a closer coworking space.

It was early into social distancing that big techcos started announcing/enforcing their policies on remote worker salaries... I though: that's fast. This must be reactive. Maybe lots of employees have already moved, or they expect them to.

Mainstream remote work has felt 5 years away for 20 years. We kind of stopped pondering the side effects. Circa 2000 there was a lot of interesting speculation though. Housing markets. Transport markets. If a 45 minute d2d commute represents 10% of a workday, remote working increases productivity by this much. Labour market flexibility and liquidity, for what that's worth. Reversing regional brain drains.

Hopefully this is because of remote work relocations, not just insolvency.

On a side note, this recessing is freaking me out.

Sleeping on a train, perhaps, is not the same as having the stamina to work for another 2 hours.

The report referenced in the article is here: https://www.zumper.com/blog/zumper-national-rent-report-july...

I wonder what long term effects there will be with having more remote workers? There are many positive side effects such as more time now that people dont have to commute, cleaner air, happier individuals, fewer automobiles on the road.

But, at the same time, will there be more urban sprawl? More alcoholism since its easier to drink at home? More loneliness or feeling less connected to your coworkers?

It'll be interesting to see how things play out. Maybe there's only a small temporary change and things go back to the way they were once this is all forgotten.

Single family home rentals seem to be going the opposite direction. My lease just came up for renewal. Tried my damnedest to talk them out of a 5% rate increase based on covid and city wide rent declines, but they said that single family homes were facing a massive inventory shortage as people were rushing from apartments to houses. =/

Will the drop in rent affect purchase prices? It doesn't seem that the cost of houses is going down in SF and LA.

In aggregate, possibly. It's highly location and feature specific. Does your condo have an exclusive-use backyard or deed patio area? That price is jumping by huge amounts right now in SF. Is it in a high-rise only served by elevators, or do you have a private entrance? Shelter-in-place friendly features are heavily in demand right now. The old selling points of Bay views and walk-to-work are getting crushed right now. Some condos are seeing big price drops, others are on the market a few days and selling way above a healthy list. It will be interesting to see how things unfold in aggregate.

San Francisco SFR is still a hot market, especially with a back yard.

I'm selling my condo with exclusive yard access once I can find a place to live in Contra Costa.

I just sold a home and bought another near Palo Alto. Prices are down 5-10% based on our experience.

It is going down from looking at Zillow data.

> average rent for a one-bedroom apartment in San Francisco fell 11.8% year over year in June, following a 9% year-over-year drop in May.

So, assuming rent was approximately constant in the year up to April, it first fell 9% now in May, and then another 3% in June? Wouldn't that be a better way of putting the numbers?

It's calculated year-over-year by matching months because there are significant seasonal effects, so you can't easily go from YOY to figure how it changed month-to-month.

Good point.

However, that also means that if there is a one-off drop of, say, 10%, then newspapers could report a "10% drop YOY" in 12 successive months.

The first apartment I moved to in San Francisco in 2013 started on $2300/month and the price jumped to $3300/month when I left 5 years later.

Yesterday, the exact same apartment after complete reconstruction was offered for $2500/month plus two free months. That's pretty incredible.

This is obviously (I believe it is obvious) related to COVID. But is this because of the general economic malaise, or because people are moving out enabled by remote work.

Let's look at other places. Non-tech places which still have good jobs in, say, energy and medicine, in a place like, say, Houston:

https://www.har.com/content/mls/?m=06&y=20

Average prices in May are down 7% to San francisco's 9%. It would seem the impact is very similar in very different cities.

This doesn't help us per se because the ability to telecommute may be as valuable in Houston as it is in San Francisco.

However, if you believe the kinds of industries in Houston -- medicine and energy -- are less able to be made remote (and I don't have evidence for this), we might suspect that most of the collapse in pricing is driven by job layoffs.

I’m not seeing it in Silicon Valley. Also: in the accessible sierras (e.g. Calaveras county) rents and house prices are going up as ppl realize they can work from home up there.

In other words, supply+demand works and has always worked.

Why is everything in the article in year-over-year percentages? Can't they just say how much the rent has actually fallen?

Good. This needs to happen.

The rent prices were way too damn high for a long time (which is the #1 reason I refuse to live in a big tech city).

Rent prices are dropping because more people are becoming homeless or dying. Not good.

This is a wild claim! Do you have anything to back it?

Rent is falling across the country...Do you believe unemployment skyrocketing to somewhere between 20-40 million people across the Country preceding the rent price crash is coincidence? Do you have an alternative hypothesis why rent across the Country is dropping? If its not a drop in demand...that would suggest the entire Country increased its housing supply at the same time.

Perhaps a good percentage of millennials moved back in with parents? Perhaps because lots of people are buying instead of continuing to rent because interest rates are so low? Massive amounts of people dying seems like quite the claim indeed.

The survey also reports a 1% uptick in national rents

Noted in TFA's 2nd paragraph.

Nothing to do with airbnb flooding the rental market?

No, removing rental properties from the market to do short term rentals lowers the supply of rental properties, so AirBnB actually has the effect of raising rental prices. Nevertheless, my understanding is AirBnB and the short term rental market are not exactly doing well during the Pandemic, have you been AirBnBing during Covid?

I think you interpreted that comment backwards.

AirBnB properties have been performing terribly during the pandemic and many of those properties are no longer viable as short-term rentals and are now flooding the traditional rental market at discounted prices or the owners are scrambling to sell them before they default on their loans.

My neighbor's home has been a full-time airbnb for four years, since the lockdowns started they moved back into it and have been living there since they couldn't rent it out. I had never even met them before covid.

I'm certain covid has decimated airbnb income for many, and it must be part of what's driving down rent prices as these units come back on the long-term rental market.

I think that’s the OP’s point, Airbnb pushed the rents up and now during the pandemic and sometime afterwards Airbnb is dead in the water so landlords are all seeking to rent longterm instead. Of course, that is one of the factors, other factors being remote work and unemployment.

I got a sublet for a fantastic price from a AirBnber who wanted to get out of a zero-income property.

40% off the market rent. Oh, and because he didn't actually live there, he left everything. Dishes, pots, a bed.

It's probably because they can move closer to Palo Alto, San Jose and other places now.

Oh awesome. Maybe someday my friends who are SF natives will be able to move back home.

What happened? Did they change the zoning laws?

I think Hacker News always cites that as the main problem, right?

There are two sides to the housing equation. Supply and demand. Demand has been high for quite some time, so the only way to alleviate it was to increase supply (aka change the zoning).

But now demand is down. Lower demand will probably be temporary until things open up again. May people live in SF for the cultural aspects (bars, clubs, theaters, restaurants). Once those open people will want to live there again.

Just to be clear, currently demand falls is addressing both global warming and housing prices. But demand is a terrible way to fix things because it means a lot of human suffering at the same time. So yes, taking away everyones money is one way of solving expensive rents, but not the ideal way.

There's taking away people's money but there's also just giving people more flexibility in where they live. If everyone still wants to live in a particular location regardless of any work requirements, that's one thing. But if people are primarily there because they have to be that's another.

Totally agree, and it is a good thing if people who doesn't want to be there doesn't need to anymore. But in general demand slumps are hard to fix and last longer.

No, demand is just lower because companies have everyone working remote for the time-being, and so for a lot of people it doesn't make sense to live in the city and pay SF rent while just sitting at home.

Instead, people are just moving to lower cost-of-living cities and working from there, so there's less demand for apartments and landlords have to lower prices to compensate.

> According to Zumper, the median rental price for a one-bedroom apartment in San Francisco fell 11.8% year over year, from $3,720 to $3,280, beating May’s 9% drop. The survey also reports a 1% uptick in national rents, with the average median apartment in the U.S. renting for $1,229 in June.

With even the most hardcore "you must work IN the office" companies switching to remote for at least another 6 months, and many probably staying that way, I don't see how more people aren't flocking out of SF. 3x the rent and a downtown slowly becoming https://en.wikipedia.org/wiki/Hamsterdam there doesn't seem much keeping people there. The old argument of, "but that's where the jobs are" really isn't the case anymore.

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