Slowly but surely the party seems to be coming to an end.
If you haven’t renegotiated your lease or found a new apartment, you’d better act quickly. The window to capitalizing on lower rents in San Francisco seems to be closing.
There have been small but significant increases in average rents in the city in recent months, while a number of external factors point to even stronger increases.
In May, the average one-bedroom rents in San Francisco rose 2 percent to $ 2,650, according to real estate analyst Zumper. Two bedroom rents rose 3 percent to $ 3,600.
Rents are rising even faster in Silicon Valley. Palo Alto, Mountain View, and San Jose all saw one-bedroom rents rise more than 5 percent last month.
Of course, these cities still have a long way to go to get back to their pre-pandemic prices. San Francisco and Silicon Valley are among the places that have seen the sharpest rent drops in the US over the past year as remote working became the norm across the tech industry. San Francisco rents are still down 24 percent from pre-pandemic times or 30 percent from their 2015 peak, according to real estate website Socketsite.
Socketsite reports that the number of units available for rent has decreased by about 20 percent over the past month. However, there are still 45 percent more units on the market than a year ago and 85 percent more than before the pandemic. These numbers show that vacancy rates are falling and rents are rising, but a lot of inventory remains in the market.
With the things that make San Francisco a desirable place to live open up again in the coming months, it’s hard to imagine rents coming down.
On June 15th, San Francisco will lift virtually all COVID restrictions, which will be reflected in bars, restaurants, museums, cannabis lounges and Giants games at full capacity. Concerts and music festivals will resume later in the summer, including the Stern Grove summer concert series and the Noise Pop Festival. Many large employers in the Bay Area are planning a partial return to personal work by September. That means former San Francisco residents who moved to Tahoe or Turlock will either have to brave multi-hour commutes a few days a week or rethink their priorities.
At the same time, there are some signs that people’s aversion to smaller apartments in apartment buildings is decreasing. In the Examiner, real estate columnist Larry Rosen reported that over 1,000 condos were sold in the city in March and April of this year, more than in any two-month period in the past 10 years. Since January 2021, the average sales price for condominiums has increased by 13.5 percent.
When condominiums get more expensive, apartment rents will tend to follow suit. But then again, if we have learned anything from last year, it is to expect the unexpected.
So, just to be sure, write this lease while you can still afford it!