San Francisco, Silicon Valley rents plunge amid downturn
sfchronicle.com
sfchronicle.com
I manage a couple of properties in the Bay Area, so I keep a close eye on these things. What I'm seeing is not a drop in rents, but an increase in $0 deposits and many weeks of free rent upon move in (sometimes 6+ weeks).
Landlords are very reluctant to lower rents, because with the statewide rent control that limits increases to 5% a year, we're incentivized to keep the rents high and give months of free rent, just so our base rate doesn't drop.
How is it that Mission Bay apartments are not subject to these rent control regulations if this is state wide? Asking because when I lived in Mission Bay, UDR properties each year tried increasing my rent much higher than this.
Also there are a lot of exemptions, one big one being that the building needs to be 15 years old to be subject to the law.
So, if you rented before Jan 1, and your rental unit was built after 1979, it wasn't covered by any rent control. Landlords could raise rent as much as they wanted on those types of units.
The intrinsic value may in fact be down, but there is no way to know for sure without two parties in the transaction.
My landlord hasn't lowered rent, but to incentivize us to stay he replaced our washing machine and upgraded some stuff around the property. That being said if my company ends up going fully remote (which looks likely) I'll probably be leaving the bay area anyways.
You've been given bad info. The UC President said all campuses will be open in the fall, in a hybrid mode. Berkeley's Chancellor has said that labs will be open with restrictions, but most likely lectures will not.
That of course could change.
One of the properties I manage is in Berkeley. I just renewed the lease in May, but I put in a clause that allows the tenants to cancel if classes are cancelled. They wanted to make sure they had housing secured in case classes came back. I also told them we would reduce the rent in the Fall if necessary.
As a landlord, I'd much rather have renters at a reduced rate than none at all, even if that rent is near zero, just to keep the place occupied to reduce crime.
The UC President has said that they expect a hybrid mode of instruction, but it's not clear whether there will be in person classes. It seems like each school themselves have a say in the decision.
> Napolitano indicated that each UC campus would be required to “meet system-wide thresholds” for Covid-19 testing, contact tracing and isolation before being allowed to open.
> Once the standards are met, campuses “can consider whether to maintain fully remote instruction in the fall or return some portion of their students to campus.”
> A decision is expected in the middle of June. [2]
A Berkeley CS professor also posted that he thinks the fall term will (and should) be online-only: https://www.reddit.com/r/berkeley/comments/g9vxb0/why_i_thin...
[1] https://news.berkeley.edu/2020/05/06/an-update-on-uc-berkele... [2] https://www.mercurynews.com/2020/05/20/coronavirus-universit...
"Berkeley's Chancellor has said that labs will be open with restrictions, but most likely lectures will not."
So when I say "classes will be closed," I mean that labs will not be open.
[1] https://www.reddit.com/r/berkeley/comments/c3r8f0/what_happe...
She means the more standard definition of "places where there is equipment for students and professors to use for research".
She is saying that campus labs (rooms with special equipment for research) will most likely be open in the fall with extra precautions, and that classes may be remote only or they may offer both remote and in person options, but they haven't decided yet.
But she's pretty adamant that students and professors will have access to their equipment for research.
So no, campus will not be closed. Classes may be closed, which I said initially.
I'm not sure why you're arguing with me. We said the same thing. You just said it in a different way, and I'm not sure why.
So what he should have been doing anyway. Amazing.
God what a short-sighted policy. Not that I expect rent control to go well but that's nuts.
" In determining the lowest gross rental amount pursuant to this section, any rent discounts, incentives, concessions, or credits offered by the owner of such unit of residential real property and accepted by the tenant shall be excluded. "
Civil code section 1947.12.
"Affordable housing" is a completely separate issue.
In a city like SF, vacancies is not a thing. Actually for that matter, in any market the market price is some equilibrium price that gives a certain vacancy rate.
Here is one of many papers: http://www.socsci.uci.edu/~jkbrueck/course%20readings/gyourk...
As you mention, a significant percentage of tenants with rent control would be regarded as "high income" households.
Hell, I know a guy who has a rent control units for a couple decades. He can pay his monthly rent with one day's take-home pay.
It sounds outrageous, but I know someone like that too. Got a rent controlled box in Berkeley as a student, never left. Rent is only about $700 a month now. If you make $180,000 a year, that's a single day's pay.
Not to mention the homeless.
Don't get me started on the housing "market" and rent control impact on supply/demand. Housing is largely an adversarial game, not a win-win game.
It certainly has its issues, but there are much worse market distorting policies that I would like to see be fixed before rent control gets put on the chopping block.
It is absolutely not in owner interests. But cities by and large have been built in accordance with owner interests.
Rent control prevents rents from aggressively dropping because landlords know the rents can’t be increased later. This is during a time when rents really need to go down.
We'll see where this takes us, but obviously if the population is dropping by 20% a year, keeping the theoretical option to charge a rent of 4k when the actual value is 2k won't matter.
Also, I'd like to add that landlords are incentivized to charge high rents anyway. Even without rent control there's not going to be $800 rents in San Francisco anytime soon, sorry.
This is just a holding pattern, right now. There's a slim chance that things could go back to normal, say with a quickly developed vaccine through decisive national leadership, and a lot of luck. In that case, those prices will look sensible again.
I think the odds of that are extremely low... but they're not 0%.
Probably, though, prices are going to crash. Some landlords will accept the inevitable and start charging less to rent out their rooms; if things are really caving in as people expect, landlords may be reluctant, but if it's that or lose money on empty rooms, they'll lower prices. And if things get that bad, then landlords will be lowering prices.
Think of all the AirBnB hosts making 0$, all the landlords with mortgages depending on some kind of rent to meet their bills. They'll lead the way, and others will follow, just to keep up.
Midwest real estate I’ve acquired offers cash flow you can’t find on the coasts but no hope of appreciation. To each their own.
Forgetting about all the high paying jobs around together with the restrictions for building sounds too convenient to blame it on rent control.
Their adamant defense that the unit was already at "market price" was just such absolute bullshit that I nearly moved just on principle. Lucky for them, I hate moving even more than I hate the landlord.
The average monthly price on my extension is about 11% below my average monthly price on the old lease.
They've implemented a time-based stabilizing mechanism, instead of an arbitrary percentage-based cap. Moving is a huge cost for a tenant, so if a landlord raises rents every year, expecting people to be able to move every year to a fairly-priced place is insanity. But, I do think most people can handle a move every 5 years to a cheaper neighborhood if they need to.
This downturn may be different because of the shift to work-from-anywhere in tech, but it will be interesting to see. A lot of people like their tech offices, with their free lunches and snacks and gyms and coffee and so on.
Ended up taking an apartment there for $1400/month six months later, and it stayed at that level for 3 years. (And then shot up rapidly afterwards - I left when it hit $2400/month 5 years later, and it's currently renting for $2900/month.) It had gone down so rapidly that its price was underneath the less-swanky complex a block down the street which normally rented for ~$300/month less and had itself cut rents from about $1800/month to $1450/month over those 6 months.
Rents are sticky - landlords try to avoid cutting if they don't have to. But when there's a choice between letting the apartments go vacant and servicing your debt payments, they have to cut, and if there's a shortage of tenants at that time (because everybody's left and gone home) the cuts can be pretty drastic.
I wonder if house prices will also behave similarly. Right now, the "mainstream" market (i.e. the house that working professionals can afford on income and mortgage without being independently wealthy) tops out at about $2.8M-$3M in Mountain View or Los Altos, but there are a lot of houses selling in the $4-6M range that presumably are being bought with stock options. Could perhaps see a collapse of the top end of the market down to the mainstream real estate market if the stock market collapses.
Is this true in markets where people can legally squat for months? Or as in Seattle where landlords are required to indiscriminately house the first qualified applicant? $0 deposit would make this very exploitable.
- A month (or year) of time in the apartment for cost $x.
- An option on purchasing more time for cost $y/time unit.
What these "tricks" do is make $x less than $y. That makes sense in the short term when you expect to be able demand higher rent/unit time in the future. When that expectation is no longer likely, it makes sense to lower $y to $x because other landlords will, and they will have less turnover (costs) and the same amount of income.
I look at it like: the fair value for rent is x. The current rent is y > x. If the landlord nominally lowers the rent, they cannot raise it to as high a value next year, and they do not want to do this. Therefore they are incentivised to (effectively) give the tenant money along with the rent to decrease y without changing the nominal rent and giving up on the right to increase it.
It maybe looks like the landlord is selling a years rent for x and buying a put for the next years rent at y (and recursively options for the later years), but it isn’t really like a put either because it’s really a right-to-try-to-sell rather than a right-to-sell.
Theoretically in a rent controlled market the landlord can't cancel the call option. In practice they might be able to by jumping through some (expensive) hoops, but it should be a reasonable approximation still.
I'm not quite sure what sf/Cali law looks like so I am just taking in generalities about rent controlled markets.
No one is going to click on a $2000 apartment with six months free when the listings are full of $1500 apartments.
Small mom and pop landlords play it differently. They will just rent you outright without these tricks.
Given Housing is now primarily an investment rather than a home for everybody. I would guess most government would likely not pass such proposal.
Though I would certainly expect the number of transactions to decrease a lot.
So for the most part people just couldn't move, even if they wanted to.
Obviously landlords are hoping that it's a temporary measure, but who knows what next year will bring.
I mean I personally hope that the government steps in and helps them stay where they are, but that will also keep rents artificially high and would be a transfer of wealth from the treasury to landlords. So pros and cons.
Realistically what seems to be happening is people are moving to lower cost areas within California or outside the state, or moving in with family.
What I'm actually saying is that you can't simultaneously agree that "people aren't moving to SF," and that "the market is fine, because it's a thin market and these prices reflect very few transactions." The latter is a consequence of the former, and the root cause of both is that people just don't have the money to move. This, in combination with the coronavirus eviction moratorium in California, leads me to believe that people aren't moving anywhere, not that they're moving to lower cost areas.
I hope I'm wrong, because unless the government steps in with something radical like a debt jubilee, those people staying in their SF apartments with no income and incurring debt are just going to suffer more down the road.
That's basically a fancy way of lowering the rate, right?
Our friends just bought a new house in a development and the builder did a similar game where they added in some bells and whistles instead of coming down on the price. Their reasoning was that they couldn't drop the price because that's public data and it would put pressure on them to accept lower prices from other buyers in the neighborhood.
Landlords don't want to accept that rents need to go down so they leave it up at the same price even if it means that places go vacant for multiple months. In a perfect market rents would be down 15/20% already.
More anecdata, but as a resident who IS moving I really disagree with your take - we're probably both right in different ways.
FWIW all private room + 2/3 roomate situations were in the range of $1200 - $1500 vs. my current 1 bed room apartment (no roomates) @ ~$2800 previously.
I worked in the TL for three years and went on a few dates with a girl who lived there. The people in actual apartments are fine. People in SROs not so much, people on the street can be a problem. The needles, urine, feces are real. The attendant at the lot I parked at said he thought he'd be dead within six weeks of taking the job, but in my time there, I think he was only assaulted once (it was more jarring than injuring). One coworker got slapped by one of the crazies, another assaulted. Oddly enough, my car did fine. I've street-parked it around Turk and Jones and picked it up at ~midnight with all my windows intact. As bad as the TL is, it isn't Bayview. I'm always amazed at walk from with Powell to Civic Center, Geary to Market, or west from Union Square; how quickly it changes is incredible. You also see scared, lost tourists a lot because of that.
There are some interesting restaurants there, and you're actually close to a lot of things. If you're living there in a secure building with a secure garage and can mostly avoid the street, it's tolerable. I wouldn't make a habit of casually walking around the block or stumbling home drunk. If you're paying attention and walking with intent, you're generally fine.
After being here for ~2 years I would not recommend the TL because the cost savings and walking commute to downtown are not enough given alternative choices.
If you need to save money you need to move further away to realize real savings, there are too many hidden fees living in the city.
If you have money you'll want to either live in 0-commute distance i.e. near the embarcadero or in literal downtown, or live in the Marina / Presidio / Anywhere else and have a 15 minute drive in.
- 13 month rents for the price of 12
- $0 deposits
- etc
In practice, this meant that a lot of young people who were living in Brooklyn decided to move back into Manhattan. This was one of the main driving forces behind the transition of the Financial District (basically almost the southern tip of Manhattan) from an office only area to a residential area.
I actually knew someone who lived in an "apartment" building that had been converted from an office building. The layout was of an apartment but if you looked up you saw the classic perforated drop ceiling tiles of an office.
Coincidently I have been seeing a lot of fully furnished units coming on the market which I assume were former Airbnbs.
I've been noticing this as well (I can still find some of them on Airbnb actually).
I'm currently in the market for a house, but wondering if waiting a year might be a wise move..
More interesting is the huge hit to the volume of sales. Mountain View was turning over about 8 houses/month before COVID, but for each of the last 2 months, only 4 houses have sold, and 5 in March.
I think it'll be a while, and depend upon how the reopening goes, whether we get layoffs at major tech companies, and whether remote work becomes common.
If you don't already own, waiting for a drop might be wise, but if you're going to sell stock to do it, you might wanna do it now. I'm looking at trading up to a new place right now and that's my plan.
Might be a wise move, but the current interest rates make it hard to pass up a mortgage..
Wow. Does anyone have an estimate of the cost of living increase caused by Airbnb rentals?
Once fees are included, AirBnB is usually more expensive in markets like SF, LA, or NY for individual/couple listings than a comparably furnished hotel room (inclusive of fees).
It gets even better when you split the cost with people. I can get a full, nice house in a great location in LA for a little over $200 a night all in and split it with 5 friends. I would have to get a hotel penthouse for the experience to be even close.
And yes, the fact that it's so cheap does significantly increase the appetite for weekend trips for people my age. The housing part of the trip goes from a major expense to almost an afterthought.
The issues of noise, trash, parking etc should be made to be internalized by those that bring the nuisance. There are noise laws, littering laws, and parking ordinances. Maybe adjustments are appropriate in some cases.
At the end of the day, anti-AirBnB laws are about control over your neighbor. The same things were said about home offices for years (and still are in some localities). The problem is, you can always point to antecdata to support your point, but we should be looking at individual violators of reasonable laws that uphold health and safety in a neighborhood - not using a blunt instrument to snuff out all new uses of property that come about because you don't like it.
I mean this sounds good and all, but in practice property owners are at the forefront of restrictive zoning regulations too.
Ok, show me where the tourists do this without a landlord enabling it. If AirBnb didn't exist, would tourist just sleep in the park?
1. The consequences of having millions of unemployed people with bills to pay and no income are too much for a nation, let alone politicians in an election year. My bet is that the payments will be extended or replaced with something as the alternative is not viable.
2. WFH has already started normalizing, and will shortly become a differentiating perk offered by companies. I don't suspect that may of the people living in tech hubs would choose to continue doing so if they had the opportunity to live anywhere they wanted (of course while considering COL adjustment).
If you're willing to halt people's food benefits during a historic recession, almost anything seem possible.
I don't think we are going to know the real impact on the housing market until the lockdowns end and people resume normal activities like buying and selling homes. Then we will see if the relationship between supply and demand shifts.
Personally, I think that if work from home continues for a large number of people, people who have families are going to want to get out of condos and apartments and into houses where they can have dedicated office space. I wouldn't be surprised if demand shifts away from places like San Francisco toward houses in the suburbs with 4 or more bedrooms.
It took about 2 years for house prices to bottom in the 2008 recession. I think the big reason was that it took a while for the record number of foreclosures to work their way through the system. If we do see the housing market impacted due to COVID, I wouldn't be surprised if it took a similar amount of time. But I also think that a quick recovery could prevent or mitigate a downturn.
I am actually setting up a fund to buy distressed properties, if anybody is interested just hit me up (email in profile)
California UI maxes out at $450 per week. This is the same amount as 2008. $1400 per month (take out taxes) won't really cover any rent situation in the Bay Area, and definitely not a $3500 nice-but-not-amazing apartment.
Selfishly, I hope these friends thrive in these new locales, whether that's through remote work or finding new opportunities. I hope they get out of their inflated NYC rents and bring new energy and ideas outside of the city. SF and NYC have had a chokehold on tech and other prosperous industries for way too long and this had ramifications nationally and in the cities themselves.
Not to pick on you cause I agree, but I feel like this is a problem with a lot of analysis of this phenomenon. A lot of people really really really hope this happens and the growth of megacities reverses. WFH/Remote job growth is the mechanism they are counting on because outside the cities there is so little economic dynamism, outside of a few firms in a few locations that are almost the only game in town.
At the end of the day, when this is all over, companies are going to want to have their employees in the office, especially as tech jobs become more and more commoditized. My guess is in five years you're gonna have superstars that built insane resumes the past 15 years living wherever they want but the vast majority of tech jobs will remain in tech hubs.
In my experience of IT work for last 15 years if I exclude first few years where I needed some hand holding from senior folks, most work related discussions happen via conf calls and conclusions are shared via e-mail/chat. Conf calls are common because teams/clients are distributed across geographies. I also noticed a trend where folks in same campus but different building or even in same building but different floor demand a conf call be setup because they can't be bothered to show up for a face-to-face meeting in conf room.
Any job can be enhanced with additional tech literacy, but I don't believe we will achieve a world where the majority of work is telecommutable. Spending my salary enriches the local economy a little bit, but I am taking advantage of a lower cost of living without making much of a major investment. In my current arrangement, I'm not going to rent office space, hire an intern, work with local businesses, or do other actions expected of a small business.
In my "selfish" prediction, some of those employees are caught in a dilemma when lockdown orders are lifted. Spoiled by the potential of life outside of the megacities, they start businesses in their new locales. And yes, maybe these small businesses will lease offices, warehouses, or plants locally. Maybe then we'll see nimble companies competing against the SF/NYC incumbents.
Optimistically speaking, we may even greater diversity in tech, as locals join the workforce and industries that were suffocated by SF/NYC costs find space to grow. In particular, I'm always perplexed that agritech, manufacturing, design, and entertainment feel the need to stay SF or NYC-based.
- Homes with more bedrooms will become significantly more attractive because people will want home offices (maybe one for each spouse!)
- Homes with outdoor space will become more attractive
- Quiet homes without noise from neighbors or the surrounding area will become more attractive
- Proximity to public transit, freeways, and downtown areas will become less attractive as the drawbacks will exceed the benefits for most people
All of this will tend to push buyers toward large suburban homes rather than apartments or condos. In the long term, I expect rents and sale prices for apartments and condos will drop for those reasons.
House prices might even go up, relatively speaking, compared to prices for apartments and condos.
What we are seeing right now is not that -- right now, what we are seeing is people unable to pay rent and landlords desperate for paying tenants.
I think what we might see is an increase in demand for bigger units in the city as a young single person may want a two bedroom place, one for their home office and one for sleeping, but still want to be in the city to be near all the cultural and social amenities.
And we'll also see increased demand for even bigger suburban homes as each spouse needs their own home office.
So I think we'll see increased demand for larger homes in both the city and the suburbs.
I think we are in for at least a year of social distancing and heavy restrictions on restaurants, bars, concert venues, sports arenas, etc. A lot of things that were previously considered amenities will now seem dangerous, such as public transit.
Here's some anecdata from my little corner of SF. I know THREE separate homes trying to fill rooms, and it's going awfully. The rent is too high, and there aren't enough people looking for rooms.
My old luxury apartment building has cut rents by around $500 for a two bedroom, about 10% (though I think they're doing it by way of free months).
The luxury building down the street, Duboce, is also offering 2 bedrooms at about $500 off peak. They're also listing their rooms on craigslist.
I rent a flat with two others in San Francisco. They're both leaving the city, and rather than find another apartment, I'm going to leave temporarily too. Funny, the landlord could have just given us a reduction and sign a new lease. Unfortunately, he'll now have to contest for a dwindling pool of applicants or let the place sit empty.
If you lease ends on July 1, you can turn in your keys on June 30 and walk away. Your landlord knows this.
Rents won't go back up in July. Even if the economy recovers 100% in the next two weeks, most tech employers in the area are doing WFH until at least the fall if not next year or forever.
If your lease ends on July 1, start looking for a new place now, but don't sign anything. As soon as you find something tell your current landlord that you are about to sign a new lease but you'd much rather not go through the hassle of moving. If they say yes, great, and if they say no, at least you have a new place lined up.
Just make sure you take lots of pictures when you move out because your landlord sounds like the type that will nickel-and-dime you on your deposit.
Every lease I've ever signed required 30 days notice from either party to end the lease when the lease term ends, otherwise it proceeds on a month to month basis with no further action required.
Edit: Technically not required in California but confirmed that it was in fact required for a previous state I lived in.
This isn't guaranteed. In my case (renter in North Carolina), even at the end of my lease I have to give a 60 day notice prior to the lease-end or else my lease switches to month-to-month automatically.
It's certainly a nice courtesy to let them know if you're leaving, but at least in California, it isn't required by law.
This is definitely a possibility. In practice it doesn't happen because it's a pain to find new renters, especially if you don't list and show the property ahead of time. Unless you're trying to get rid of a tenant it's unlikely to happen.
Also the tenant has other protections. If they won't renew your lease, they would have to evict you. A process that takes 30 days at least, and requires a visit to a judge. The judge would most likely side with the tenant on this one.
Why would the judge side with someone that is no longer in a contractual relationship with the landlord? I would certainly not risk the mark against my renting record.
Also there are so many tenant protection laws, it may not be possible to just not accept rent. I've honestly never looked into it because I wouldn't do that to someone.
Mine is pretty clear that it's an automatic rollover, but fair -- every state (and lease!) is different.
> If you don't pay the rent, the lease just ends.
Oof, sounds like a nice way to end up with a bad mark against you nonetheless.
Lived here 3 years and pretty happy with it but I checked Craigslist and padmapper last week for some of these supposed 15% rent discounts and found rent to be pretty much the same as pre pandemic.
This is anecdata and I’m using human memory to compare rates per location/amenities but I think I would be noticing even 10% decreases... and I’m just
I did this for a time in LA, but man, every time I see these rates, I'm just so glad I'm not there. I pay ~2k for a 3 story house, 5 bed, 3 bath, jacuzzi, 2 car garage, a smallish yard, and full HOA thingys like a big gym/YMCA center, shooting range, 18 hole golf course, batting cages, big pools, and camping areas. Denver area.
In hindsight, we should have held out for a “make us move” offer. $10K’s is typical for that sort of situation in Berkeley.
We’re too nice, and moved without a fight, in return the landlord came up with some BS reason to withhold our security deposit.
If they had a longer lease, then I’d agree the landlord can’t force them out before the lease ends.
California isn't a feudal society, yet.
https://www.nytimes.com/2020/01/31/world/europe/berlin-gentr...
That is not happening this year. So comparing to last year, you are seeing a larger drop, but it will left to be seen whether the scale of this drop is temporary or long-term.
That said, the Bay Area landlords have benefited from the bloom for a decade, they are losing anything significantly, not yet.
Isnt it somthing that the last thirty years is exactly when millions of US adults had turned thirty+. The cost structure of a young adult in the last thirty years has been nothing like the previous thirty. Building new housing (and rental units) has been substantially restricted across generations in California, but it got particularly noxious with the six-figure twenty somethings taking the rentals, while the other ninety-eight percent of the population just ate the cost increases at every turn. These are economic facts and are documented extensively at the Terner Center at UC Berkeley among other places.
I suspect rents are going to fall further, too, because there are still a lot of vacancies. They're down maybe $200 on a $2000/mo 1BR, which is a lot in percentage terms but is still an awfully high rent when about 20% of units are vacant.
I'm actually looking for a new place in the Bay Area next month -- some units have their sticker price uncharacteristically low for sure; many have some kind of specials running too, like first month rent free. I asked a few leasing reps if this is due to the current situation and they invariably say these specials have always been in place off-and-on throughout the years, but perhaps that is just a convenient statement to convince prospective tenants that their "desirability" is quite inert to general market conditions?
My complex charges existing tenants greater than 5% more than new ones because they know that few people want to go through the pain of moving out. I haven been able to use the obviousness of this to keep negotiating the "new tenant" rate with them.
Amongst my cohorts/closest friends I know in the Bay Area: - one moved to Colorado a year ago. - another moved to Berkeley from SF, to buy a house. - several moved to New York City and Seattle. - a few moved back to Canada.
In my time in the Bay Area, it always seemed like there was constant migration: some folks leaving, some folks just arriving. Usually more of the latter.
Due to the current pandemic, I'd definitely guess that the rate of folks leaving hasn't changed significantly (compounded with layoffs, etc.) but the rate of folks arriving certainly has! No interns are flying out, no recent grads are moving in.
If things "return to normal" then I'd expect this to revert, but those people aren't just milling about waiting for the gates to open. They're finding other opportunities, and when the dust settles, the opportunities in the Bay Area aren't going to be the highly competitive opportunities they once were.
I'm in NYC and we are strongly considering moving out when our lease expires in July. Google NYC isn't reopening at least through the end of the year so it doesn't make sense to continue paying a lot to live in a one bedroom apartment that is sub-optimal for multiple people to work from, especially while most of the typical amenities of city life are closed. The main reason I lived here was for a short commute and that's irrelevant now.
All three of us are sort of "just milling around waiting for the gates to open". Not literally, any of us could technically be in the city our workplace is in today (the border isn't closed to work related travel), but we are waiting to be required to show up in person at the office before we move (back). In the meantime we'd rather be here where we have lots of space, good company, no rent, and so on.
My rent was $4300. They're currently renting the same unit on a higher floor for $3500.
You should ask them to lower your rent to $3500. Then ask if you can move in upstairs.
It also depends on things such as how much money/time/effort the landlord want to put into "turning" an apartment, the number of corporate long-term rentals a complex has, what the landlord thinks is going to happen in the near future, and even what property management software the apartment complex runs.
Even if you move nearby, moving isn't free in either time or money.
And they'd follow up with a multi-thousand dollar bill for the remainder of your lease, plus fees, that is legally enforceable, and due immediately.
A lease is a contract. You don't get to just walk away.
In early March it appeared to be ~2%. Now I count over a 10% vacancy rate.
Definitely seems like a real drop in demand.
It is pretty insane, I don't see why anyone wouldn't move to a new place. The only thing that is making me think twice is that I'm in a rent controlled place right now and there's no way I would move to a non-rent controlled place.
I think it's bigger than you think.
I read a newspaper article just yesterday which stated that the average annual turnover rate for an apartment complex in the United States is almost 50%.
In a given month, if the latest rentals are all luxury apartments, that will spike the average rent price even if prices haven't moved at all.
The folks who haven't moved out of the Bay Area have mostly moved to the distant exurbs, expecting (probably correctly) that even if we do "return to the office" in 2021 they'll likely be able to continue to WFH 2-3 days a week, thus the commute won't be as painful as it would otherwise be.
Yeah, that's not much of a drop.
I'm paying $3200/mo for a 2-bed in Central Square (1 subway stop away, still in Cambridge) in a much older building. Moving here from the Bay Area in 2018 made that feel like a good deal, but even I'm looking for a bigger place further out right now.
I'm presuming you're looking at spam listings and getting taken for a ride.
Boston has tech but smaller than SF. It's big on pharma, hospitals, and universities. Such industries cannot switch to fully remote so change here might not be as drastic as in other places.
Also colleges are closed so when colleges open in Aug/ Sept, many students will be back who left this year due to the COVID crisis raising the demand. This summer the demand is lower than ever due to COVID and homelessness.
Anyway, even with COVID + Rioting, I'd much rather live in a big city than in the countryside.
The cost of renewing your lease and staying in the bay area vs simply moving out for the year to your parents' house / LCOL area where if it really comes down to it, you can simply break your lease much easier is an easy trade-off.
Depends on what you're looking for. The police managed to find and shut down an underground club mid-April[0]. I'll bet the police didn't find the only one.
I'd be very surprised if it takes more than a year. Thinking back to the airline industry post 9/11, the airlines were strongly motivated to reopen the skies. The situation's different, but as we learn more about COVID-19, we get a better and better picture on what is necessary for it to be safe to reopen. The Hubei restaurant airflow study[1] says it's possible to be in the same room as an infected person and not get sick.
We shouldn't rush to reopen, but we can be more proactive than just "hope it goes away", by, eg expanding testing.
[0] https://www.sfchronicle.com/crime/article/Police-shut-down-S...
[1] https://www.nytimes.com/2020/04/20/health/airflow-coronaviru...
I'm 45 and definitely considering my options for getting out of the Bay Area. Then again, I really, really do not like it here. If nothing else I'll be looking into taking advantage of cheaper rents to move up the peninsula and away from SJ.
Doesn't mean I'm not kicking myself for signing a 2-year lease on a place last fall, though. I love my apartment, I've been here 2 years already, and its a fair price, but I'm basically 8 months into a 24 month lease and could probably save almost 10k over the next 16 months if I had the option of breaking the lease and moving.
The volume of anyone else obsessed with 'networking' is much lower.
Real estate here bottomed in 2010 after the 08-09 recession. It took about 2 years to make its way from profits to stock prices to layoffs to home prices.
I think the lack of interns, tech layoffs, and WFH may be a larger part of it, I'm just wondering if there is any data out there on how it breaks down by category.
https://www.caixinglobal.com/2020-05-28/china-wont-ease-curb....
It's extremely expensive to fly into China right now because of it.
It seems that many want to stay in region but not right in the core of things, especially if their companies are shifting to WFH where daily commute is less of a deciding factor.
I'm talking apartments that were above 4k/month which are now around 2-3k/month.
I think this is a good time for me to change flat.
Rents elsewehere are stable as the demand has gone up from people who are abandoning downtown for more space and mobility and avoiding homelessness.
It is just matter of time for certain percentages (20,30% or more) of folks decide to move out to Tracy, Sacramento, etc to just commute to work may once every 1,2 weeks or as needed.
A formerly tacky suburban bungalow with a fenced in backyard starts looking pretty good in a quarantine compared to a one-bedroom apartment where the only way outside is via a germ-filled elevator. Watching downtowns like Chicago's burn is going to make a lot of business rethink locating to urban cores, especially when remote work is proving to be highly effective.
Even if all of this passes quickly, the imagery and emotion will remain. Just like 3-mile Island effectively put an end to nuclear energy in the U.S. even though it was an isolated incident, memories of quarantines and burning police cars are going to do lasting damage to economic development in urban cores.
People have short memories.
> Just like 3-mile Island effectively put an end to nuclear energy in the U.S. even though it was an isolated incident
Construction cost killed nuclear.
The market there was already excessively over-valued. The virus proved how unnecessary they actually are.
A real correction is good.
"Goss" is Charley Goss of the San Francisco Apartment Association, FYI.
My luxury building and a few others I checked have slashed rent 10-15%, while also offering 6-8 weeks free, which is two months. That means the real asking rate in these properties another 15% lower. Thats a total of 27% lower.
You can try offering far less. I would ambitiously go for 60% lower than asking price and see what happens. Assume they're cash starved too.