It Starts: Rents Drop in 10 of the Top 12 US Markets

Check out the rental trends in your own city.

The construction boom of apartment and condo buildings around the US, especially in high-priced metro areas on the East Coast and the West Coast, is now colliding with the reality of squeezed household incomes and soaring rents. As a consequence, in many of the hottest markets – including San Francisco, where the explosion in rents is called “The Housing Crisis” – rents have started to drop.

Landlords are competing with a surge of new supply from new apartment and condo developments. Incentives, such as one month free rent, a rarity in hot markets like San Francisco, have reappeared. And in some of the neighborhoods with new apartment towers, the “now leasing” banners are everywhere.

On a month-to-month basis, median asking rents of one-bedroom apartments fell in 10 of the top 12 rental markets in August, according to the Zumper National Rent Report, which analyzes rental data from over 1 million active rental listings in the US.

And compared to August last year, asking rents fell in 7 of the top 12 markets.

In this table of the top 12 markets, listed in order of the dizzying magnitude of their median asking rents for one-bedroom apartments, San Francisco is in the glamorous Number One position, though the median asking rent embarrassingly has declined 2.5% year-over-year. Note the big year-over-year drop in Chicago:

US-rents-top 12-markets-1-bedroom-2016-08

The table doesn’t include smaller rental markets such as Palo Alto, at the core of Silicon Valley, were the median rent is an utterly insane $5,800 that is also skittering south.

In the two-bedroom world, the situation is similar but not yet as advanced, with “only” 8 of the top 12 markets showing monthly declines and four showing year-over-year declines. Once again, San Francisco is in the Number One spot, and once again, embarrassingly, median asking rent has declined by 2% year-over-year:

US-rents-top 12-markets-2-bedroom-2016-08

These asking rents do not cover negotiated actual rents and incentives, such as “one month free rent,” which effectively lower the total rent for the first year but don’t quite make it into the numbers.

What surprises me is to see Oakland on this list with sharp drops on a month-to-month basis. Rents have been skyrocketing in a stunning manner in Oakland, powered higher by San Francisco and Silicon Valley escapees. I thought that pressure would persist a while longer. Oakland lagged going into the post-Financial Crisis Bay Area housing boom, and so I thought it would lag coming out of it. But apparently, I thought wrong. And the party may already be over.

Oakland too has a condo and apartment construction boom going on, and supply is hitting the market, and like in San Francisco and in Silicon Valley, investors that bought the flood of condos are shuffling them off to the rental market.

The three big cities in the Bay Area – San Francisco, San Jose, Oakland – figure in the list of the top 12, and all three are at least partially in the red!

Rents have also started to decline in many other of the top 100 markets, even in cities like Dallas, where the housing boom has been phenomenal since the Financial Crisis. On a month-over-month basis, median asking rents of one-bedroom and two-bedroom apartments dropped by 3.2% and 2.4% respectively, but they’re still up 2.5% and 1.9% year-over-year.

In many other markets, rents are still rising or even soaring, both on a month-to-month basis and on a year-over-year basis. So on the national level, a so-called mixed picture appears. Zumper:

For the first time this year to date, the national median price of both one and two bedroom units decreased. One bedrooms dropped -0.8% to a national median price of $1,146, while the two bedrooms dropped -1.0% to a median price of $1,358.

That’s on a monthly basis. On a year-to-date basis, rents for one-bedroom and two-bedroom apartments are still up over 3.3% and 3.6% respectively, still stiff increases, given the problems the US economy has in raising wages.

These are just the first feeble beginnings of gravity re-exerting its force on the housing market in some areas. Real estate is local, and these changes happen on a local basis, but if enough markets start moving in the same direction, up or down, it will impact the national figures.

For renters, a 2% reduction on a two bedroom in San Francisco that soared to $4,800, doesn’t amount to much of a consolation. These things take time. It’s a tug of war that is carried out one apartment at a time, between landlord and prospective tenants. Individually negotiated rent reductions may be much higher than 2%, including one month free rent and other incentives.

But for landlords putting new buildings on the market, even these feeble beginnings in cities where rents have started to slide are troublesome. Capitalization rates have become razor thin in expensive markets, and a process of declining rents that might last years throws the entire math into disarray.

Below are the top 100 markets, in order of the amount of rent for one-bedroom apartments. Check out your city to see what the trends are (tables by Zumper, click to enlarge):





And so utter insanity is turning south, with big consequences. Read…  “If You Own a Home in Palo Alto, CA, Sell it Now”

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  79 comments for “It Starts: Rents Drop in 10 of the Top 12 US Markets

  1. Kismet says:

    Washington, D.C. (Den of Corruption) is doing well as usual.

    • Michael Broderick says:

      Yep. D.C. is the center of the fiscal universe and will likely be the last to crack but things are as insane here as all of the other bubble markets. To echo the comment about Seattle below, I have never seen so many tower cranes over the city. Last time I looked (from the roof of a friends condo by the convention center) I could count 27.

      I’m in the A&D bizz and have seen this show before. It never ends well and the developers are the first to get hit followed shortly thereafter by the architects and engineers. Had I known going in what this career would REALLY be like I would never have bothered :( What a shit show.

    • Wolf Richter says:

      Raising the min wage in CA is important, and I’m glad they did it.

      But you better check your hopes against reality.

      Min wage in CA right now is $10. It’s higher in certain cities. It will rise to $11 next year, and by $1 dollar each year after that, until it hits $15 in 2021. That’s a LONG wait!

      So do you think that in 2021, when $15 is effective, that the min wage earner, making by then $2,600 a month before taxes, SS, etc. (or maybe $2,100 net), can afford a $3000 apartment? Or even a $2,000 apartment? Or even a $1,500 apartment?

      Min wage won’t raise rents in the expensive metros on the list. Other factors might, but not min wage. You’re looking at the wrong end of the scale.

  2. David Calder says:

    Every time I take the bus into Seattle I’m confronted with a new hole (many new holes) in the ground or an entire block wrapped up in cyclone fencing waiting for the wrecking ball. I never thought a city could change so thoroughly and so fast as this one has. A book seller told me today there are 31 cranes working on projects. If this is going to blow up I wish it would have happened before everything dear to us wasn’t already destroyed.

    • CrazyCooter says:

      Cities continuously rebuild themselves – and if they don’t they look like Detroit. So, it was inevitable – and what you are hoping for is that they finish. If they don’t, then the economic activity that drove their building in the first place is gone – and that isn’t good. If they complete, but perhaps at a huge loss, new owners will take over, folks will live there, and the local economy will continue to function.

      This is about an hour and exactly on the subject which you posted – it’s an interesting perspective about cities (over long periods of time).



      • Mary says:

        There is no rule saying that cities have to sacrifice historic buildings and neighborhoods in the interests of economic activity. I live in LA which has one of the most active preservation organizations (the LA Conservancy) in the country. They have helped save huge swaths of our historic downtown including a big warehouse district. Investment money is pouring into restoring and renovating those buildings precisely because of their beauty and historic interest.

      • two beers says:

        Good thing troglodytes who think like you do don’t run urban planning in Europe.

        “Eight hundred year old building, built like a tank? Tear it down, put up McCondos!!”

    • Lisa says:

      I’m 37 and grew up just outside Seattle, and even in the ’90s, Seattle was a “crane forest.” I don’t know if you watched “Almost Live!” when it was on. It was a local sketch comedy show that aired before SNL on the Seattle NBC affiliate. It made jokes about the crane forest then, too.

      I don’t live in that area anymore — I’m in Berkeley, CA now — but when I go home, I do see the incredible growth. It just makes me think of the crane forest joke.

  3. LG says:

    Have anyone noticed the masses of Chinese “turist” around socal? Or are they prospective renters and home buyers?

    • Wolf Richter says:

      There are many, many Chinese tourists in San Francisco as well, real tourists, here for a few days of looking and shopping and taking selfies. Just regular folks, many young couples, of the new middle class of a country with 1.3 billion people, enjoying life a little.

      There are also Chinese home buyers. So when folks show up in neighborhoods where there’s nothing touristy to do, they’re probably home buyers.

      • Shawn says:

        Ya, I live near USF. The last few years I’ve seen a lot of Chinese students around here driving around 50,70,100K cars. Yes, indeed, daddy has been generous. I saw a Chinese couple, students again, taking photos of a 2 mil house for sale. Daddy will have to get his money laundering operation in China into high gear to pay for that I guess. On a flip note, this year I see a lot fewer Chinese student driving around in those uber expansive cars, looks like China capital controls are starting to take hold.

  4. nhz says:

    unfortunately no sign of that at all in the Netherlands, after a -20% price dip in 2008-2009 the housing market has come roaring back due to the most idiotic homeowner support measures anywhere in the world (103% mortgages as standard, sub-1% mortgage rates that are fully deductible from income tax, almost non-existent property taxes, full government buyer protection against financial loss when selling the home, countless other buyer subsidies, guarantees etc.).

    And there are many other things the Dutch government does to jack up home prices and rents, punishing renters to make the bigger group of homeowners happy: importing loads of migrants who all get a new home for free (whatever the price, granting huge subsidies for razing down whole neighborhoods with cheaper homes because they are no longer ‘in demand’ (= the owners, usually housing corporations, cannot make enough money on them), etc. etc. Due to very high prices renting out normal homes is simply not profitable (gross profit 2-3% per year) and extreme renter protections makes renting out risky as well. Why bother with renting out a property if you make more money from the automatic appreciation of an empty property?

    Since 2009 Dutch home prices have been rising again at increasing rate, and every year rents in the (small) free rental market increased more than home prices every year. Today it was reported that only 7% of homeowners have trouble paying the mortgage (of course, the effective monthly payment is close to zero), while 25-50% or renters have trouble paying the rent – keep in mind these renters are not those with low income, because in that case they would be in (much cheaper) social housing.

    In the Netherlands 70% of homeowners expect prices to rice even more next year, which is the highest percentage in Europe (in other EU countries 35-50% expected further price gains). The amount of stressed renters in Netherlands, and the percentage of income they have to spend on rent, is also the highest in Europe. Which is great according to our politicians, because it supports the housing market. After all, the whole Dutch economy from the late eighties was founded on selling houses to each other at ever increasing prices, plus all the financial paper shuffling that goes along with it.

  5. Frederick says:

    Holland is nice but NOT that nice Try Eastern Europe much less expensive great food and beer and beautiful sexy women Oh right and far fewer refugees and grifters trying to rob the tourists on the streets which is a huge plus in my opinion Down side colder weather but you can always use the money you save by living there for a second home on the MED

    • nhz says:

      Eastern Europe politicians are less clueless compared to the Dutch or Germans regarding migrants and some other major EU problems. However, in some of these countries the governments are also mostly US puppets (or at least easily bribed), so anything could happen a few years down the road when Europe starts to disintegrate.

      The main problem is that most of the jobs market there is hardly accessible for people from the North-West, except for some ‘global’ jobs types like software development (this in addition to the language problem; in Holland a foreigner can get by speaking only English, but in most of Eastern Europe that doesn’t work). Starting a small business is probably just as difficult for foreigners…

      But if the stream of migrants doesn’t stop soon and the Dutch keep inflating their epic housing bubble, I’m seriously considering moving East/South despite the other issues they have there. Before you know it the new voters will be demanding sharia law in Netherlands, Germany and Scandinavia and they might be the only ones who bother voting (maybe sharia law would kill the housing bubble?).

      Nice homes on the MED in e.g. Croatia or similar locations are pretty expensive nowadays, the price level is pretty much ‘international’ unless you are in a very remote/rural location with little facilities.

      • frederick says:

        I have a friend 26 years old graduate of Syracuse U from Munich who is living and working in Warsaw The language issue is much less an issue now than it was say ten years ago The younger generation are bilingual for a great extent anyway As for Croatia its great Ive been to Zagreb and the coastal Islands and loved all of it

  6. Chris from Dallas says:


    I thought it might be the seasonal affect of landlords trying to get places rented before school starts, but then compared this to the September 2015 report =

    If anything, Wolf is understating the incentives. Here in Dallas there is so much building of Class A+ apartments that we are now hearing about deals with no Application Fee, No Deposit, and 1/2 to 1 Month Free, BUT ONLY FOR THOSE WITH GOOD CREDIT.

    And this is in an area with DEMAND still projected to exceed SUPPLY for the next 2 YEARS. Of course, the problem is that nobody is building affordable buildings in the areas where people live. Just Class A+ near downtown for empty nesters (either young or old), and in the northern eight of the DFW area.

    Plus, there are virtually no entry level houses being built although I have heard rumblings that the major homebuilders are starting to plan projects because the median and higher-end home sales are slowing.

    • Wolf Richter says:

      My understanding is that your properties are mostly lower to mid-range. Are you seeing any pressure from Class A properties as they’re cutting rents and offering incentives?

      • CT says:

        In Houston, our rent dropped 20% for our two bedroom apartment in the desirable inner-loop area! There are literally thousands ( iread somewhere in local press 25,000 ) coming to market in the next 18 months. The ones being built in the desirable areas are all Class A +. The signs going up are two months free, or a free iPad plus one month, etc. The downtown commercial area is even worse, with Shell Oil just announcing it is leaving its signature building after 40 years! I believe there are 2 million sq feet plus of office space in the downtown now empty. This does not include all the building of Class A apartments and commercial buildings that are going begging in whats know as the Energy Corridor in West Houston.

    • CrazyCooter says:


      If you are interested in trying to follow job opening trends in your area, has a pretty handy tool. I have used it to track adoption rates of new tech – as companies will actually hire for the specific tech as it becomes more prevalent.

      Find a few broad job categories that you think are representative, such as Software Engineer, and you can get a handle on at least the local job market for potential renters and their proxy risks via their labor skills (i.e. getting laid off).,-TX.html

      Having lived in Dallas for many years, IT is a huge market there, insurance is pretty big, there are multiple fabs (e.g. TI), medical, and so on. Anyway, if you figured out what five or ten general job openings to track, that gave you a broad proxy, you could keep a pretty good pulse on the local economy (i.e. you will see the number of specific types of job openings crater and know what is coming down the pike).

      Good luck, I got tired of the traffic and tolls, so I cashed out and moved to Alaska. Or maybe my ex cashed me out. Either way … :-D



      • Chris from Dallas says:

        Great idea!
        Thank you.
        I’ve always loved your posts.
        If you ever head back this way let me know.

  7. Shawntay says:

    Renter in San Francisco here. Our lease is up for renewal this month. The rate they offered was $3695 for 10 months for a 2 bed 2 bath condo like apartment. That may seem like ‘a great deal when compared to the market rate’ (as the property manager told us) but considering we currently pay $2975 that $700/month increase is mind boggling. In our search for similar places the incentives I’ve come across include 6 weeks free, $1500 gift cards, no app fees among other things. Our property has lately been filing the place with section 8 renters as normal renters are harder to come by and it guarantees market rate for them. They told us they could do $3400 for 8-10 months. My husband wanted to make a request of $3200 for 6 just in case, with the intention of just accepting the $3400 if they said no. Property manager (a new one because the property was bought out by what seems to be foreign investors) however was a little rude and said that ‘if you found somewhere cheaper you should probably just move we’re not negotiating’. That statement alone made me go ahead and turn in the notice because indeed I’ve found a house with 2bd and 2bth for $2550. The apartment/condo glut can’t happen soon enough for us because it’s obvious that many of the older properties are not reading the writing on the wall. Ive also noticed packed open houses (young techie looking couples) at the cheaper units we’ve visited while the more expensive ones are empty and remaining on the market longer. The next 10 months will be interesting.

    • Shawntay says:

      I mean we found a 2bd 1bth for $2550. We’re willing to downsize for a better rate.

      • CT says:

        FYI – now $1700 for 2bd/2bath in inner-loop Houston, high quality area…I feel for those in LA, SF, SD, NY, etc. P.S. no state income tax in TX

    • Wolf Richter says:

      Thanks for the update, esp. on the incentives.

      Here’s what baffles me: isn’t your apartment in a rent-controlled building? Most apartments are. If yes, the maximum increase this year is 1.7%.

      But also, if you have lived there for years without rent increases, the landlord is allowed to do a “catch-up” rent increase, which could amount to 10% if you haven’t received a rent increase for something like seven years.

      • Shawntay says:

        That’s the caveat to living in a newer building, its not covered by rent control. In fact, anything with its ‘certification of occupancy’ given after June 1979 is exempt. Therefore, all of these new apartment buildings and condos coming up will not be under rent control. Great for foreign investors. Our building was built in 2008. I find it interesting that many people here do not know that exception. We didn’t know that when we moved in but we came from Texas. Upon the first renewal, we inquired of rent control and was ‘enlighten’ on this unknown fact.

  8. michael says:


    Is this trend contained to apartments rather than single family homes?

  9. Petunia says:

    I’m surprised nobody has mentioned the Zika virus problem down in south Florida. If I was a woman of childbearing age, I wouldn’t go anywhere near that place for decades. The original neighborhood where the virus was found was between Miami and Ft. Lauderdale, and cases have also been reported up to Palm Beach and beyond. This has to have an impact on investors. I can’t see any yuppy couples lining up to buy with the potential consequences being so devastating.

    • Chicken says:

      There doesn’t seem to be a clear plan for eradication either, consistent with today’s environmental concerns?

      • polecat says:

        Just wait …… i can see Florida officials advocating similar aerial spray campaigns as what happened in South Carolina recently ……. with deleterious results !!

        • Chicken says:

          Deleterious results? Perhaps, I’m not sure of the detail but I clearly recall running and playing behind the mosquito fogging trucks in the neighborhood some decades ago and I turned out fine (DDT for us, no smell that I recall).

        • Chicken says:

          Okay, so I do see there resulted an unfortunate event that harmed honey bees, doesn’t sound good at all. Of course this hasn’t been parroted on my local news so perhaps the event will be covered over, will watch for it.

          So considering that new tech ideas aren’t delivering but just burning cash at best, another approach is to allow natural diseases and famine to cull some of the population.

          Guess we get to witness how highly we value habitat vs continued expansion and sprawl? Place your bets!

        • Jungle Jim says:

          That’s no joke. The spray they use to control mosquitoes also takes out the honey bees. Without them to pollinate food crops, food is going to get a lot scarcer and more expensive.

    • Mark says:

      I too am waiting to see what effect Zika has on that market. My next door neighbor (in Pennsylvania) split time between here and Wellington, and just sold their house up here to live only in Florida. His wife found out she is pregnant before the sale closed, however, so now they are staying with her family in Ohio at least until she gives birth. How many others will stay away? Now the concern about Zika affecting adult brains also can only compound the problem.

    • nhz says:

      I still have serious doubts about the official Zika story from the WHO, US CDC etc. (I’m a biochemist and read a lot about vector diseases etc.). Even more when I see high ranking people from the US military/intelligence talking their book about Zika as ‘bio-warfare’ (against the US).

      If you don’t understand a problem it is pretty difficult to do something about it. Most of these vector diseases are a result of ‘disturbing the balance’ and not caused by some new pathogen that appears out of nowhere (although with all the genetically engineerd mosquitos in Brazil, you never know). Spraying poison like is done now is a very bad idea in the long run because it disturbs the ecology even more, and vaccines (where the big money is) are often even worse.

      Trying to prevent breeding mosquitos is a good idea (cleaning pools, keeping the garden tidy etc.), but that involves real work and people don’t want that. History has shown that housing bubbles are a definite risk factor for vector diseases ;-(

      • Earl Smith says:

        You are not the only one distrusting the OFFICIAL word. Zika has been known for decades with no adverse effects. Then suddenly Brazil (with half our population) gets 7,000 cases of microcephaly in a NE farming state (verses our 25,000) and everyone points the finger at the poor mosquito (and ignores the larvacide in the water supply that is known to cause the malformation. Even Brazil is beginning to doubt the official story.

        What are we using to bug bomb the mosquito? A chemical (Nailed) that is a known problem.

        Now they are saying that it causes defects in adult brains. What about the last 60 years with no observed effects?

        Since WHO has been a known agent in the intentional sterilization by deception (tetanus vaccines with human reproductive proteins to induce an auto immune response ) one wonders about the massive numbers of abortions that will be recommended.

        • nhz says:

          Yes, there have been scares like Zika before and almost every time WHO and US CDC were on the wrong side (the big money interest, not the healthcare interest for the people). The scientific explanation has huge holes in it and many of the people and institutions involved cannot be trusted. None of these diseases are new, only the epidemics are (and sometimes those epidemics are not real, just fudged statistics).

          People seem to have forgotten about H1N1 (caused by bird droppings according to the worldwide Dutch expert, who also made millions from the ‘desperately needed’ vaccine that in the end proved totally useless, of course), Ebola (a disaster in Africa, but that isn’t what the media were obsessed with), etc. etc. For the mob only one thing counts, disaster = financial opportunity ;-(

        • pleasantplainer says:

          Pop. of Brazil is like 200 million, so 2/3rds of US not 1/2. Brazil has over 100,000 cases documented. Majority by far of US cases are in Puerto Rico – makes sense; a poor tropical island The remainder of US cases are by far majority through travel. Less than 50 locally acquired US cases Not saying Zika isn’t something to be concerned about, but no sense exaggerating things.

  10. Oakman says:

    I’ve been a renter in Oakland and now owner for many years…

    It amuses me to see the “us vs them” mentality in these various ongoing debates about housing in the Bay Area and nationwide.

    Let’s boil it down to the basics.. Housing is a product that is produced, consumed and traded. If renters are unhappy with being at the mercy of market forces they should either buy and hold and live in their house forever or change their expectations on how they live, where they live and or their occupation. Granted these are easier said than done but at least let’s acknowledge that these are options.

    If a region can’t provide enough affordable housing to their working class then the region will suffer grave consequences over the long run – no more teachers, policemen, gardeners, housekeepers, artisans, etc. The result will make the region undesirable and hence more affordable. The ebb and flow of this effect will determine “market rate” and desirability. So homeowners and landlords have a lot at stake if they vote against development and further urbanization of their idillic but unsustainable bedroom communities. Urbanization is the general trend and futile to resist.

    I’m a homeowner and landlord. I’m not owning to make a killing or fleece renters. My goal is to provide a product that is in demand and run a business – the American Dream! If rents decline so be it I will survive because I’m a prudent investor and keep my costs inline with my expenses. If rents plummet and and I go into default I’m taking the brunt of the risk, not the renter so it’s not unreasonable that landlords profit to offset these risks. My cashflow is marginal and I still hold a real job to pay my bills! Eventually I’d like to retire on rental income alone but I doubt that will be a reality for another 10-20years, just in time for retirement.

    “Us vs them” is comical because without landlords you have NO renters. Not every renter wants or has the means to own. If the market pushes rents down then I say HALLELULIA! We all benifit.

    The real culprit in my mind are the estsblished generations that refuse to accept or ACKNOWLEDGE a changing world, changing demographics and their over representation and influence over government politicians, local ordinances that block development that prevents progress. You know who you are!! ;)

    • Wolf Richter says:

      Where did you read the “Us vs them” theme? Did my article talk about landlords gouging renters? No. It analyzed a turn in market dynamics. You might not like that turn. And rents might jump next month or year again, who knows? But I don’t see anything in the discussion either that’s “us vs them.”

      BTW, good for you that you’re a conservative landlord able to get through a phase of declining rents. Many landlords are that way, thank God, especially if they bought their properties years ago and didn’t refinance to draw out equity.

      And ultimately, I would think, your lenders carry a big chunk of the risk. As it should be – you’re paying them interest every month for just that purpose.


  11. Phil in Boston says:

    I am in the Brighton Section of Boston in a 2BR/1BA. the rental rate looks about spot on, and my Landlord made it clear to me in July before we signed a new lease that there would be NO rent increase this year. I wasn’t sure at the time that was part of a broader trend.

  12. Chicken says:

    Detroit will be importing refugees to fill their vacancies, this strategy could catch fire so to speak.

    Agree meanwhile there’s bound to be some lull in rental rates to provide a lucrative ownership squeeze event.

    Be Prepared

  13. hattie says:

    Wolf, do you see the single family home market softening in the Bay Area in the near future? We are looking to buy a home in Oakland and the sold prices are truly terrifying. I’ve heard from my realtor that there are fewer offers per home than a year or 6 months ago, but homes are still selling within the two-week range and way over asking. But then, we might just leave the area.

    • Wolf Richter says:

      Oakland’s home prices have gone bonkers too. And there is a solid chance that prices will decline “in the near future,” (say, between now and two years from now)

  14. Apollyon says:

    Before you rent something for over 2,000 a month consider buying a large RV. My rent is $405.00 mo and that includes water,sewer,electric and cable TV. I can move anytime I want and flee any disaster area, I always have my possessions with me and sleep in my own bed no matter where I go.
    Pay cash for your RV and you will own it and can sell it anytime you want.

    • Chicken says:

      I’d guess a great time to sell an RV is during a housing bust.

    • Ehawk says:

      wow… This what has come down to…

      The American Dream *** living in a RV. I thought those were for middle class people to go on vacation..

      housing so expensive that people live in their cars. People live 2,3,4 families in a big house, with converted garage, with temporary storage in the back yard as rooms for extended family…

      In San Jose, sillycon valley construction is everywhere for buildings commercial and residential. Yet, prices are insane still.

      To the older people you are in their homes bought years ago. Better not be leverage, because the new thing in the job market is to fire the older than 50 and replace with cheaper and hungry millennials.

      Great work our leaders have done…

      Eyy… the Stock marker is even higher. The worst things get the higher the stock market goes. things are peachy for the rich…

      • Edward E says:

        Dang, well obviously I haven’t kept up with rent & house pmt costs in a long time… amazes me but Apollyon’s rent is only a bit over a hundred dollars less than my mortgage payments were.. Of course if our place was over in Arkiefornia, where all the rich people at Squall~Mart do the ruthless supplier agreements that offshore our jobs, well the payments would easily have been quadruple that or more. Yep, things sure are peachy…

  15. tom penick says:

    you are so wrong about ca rental market ca passed a law that brings min wage to 15 dollars a hour rents are on the upside

    • Wolf Richter says:

      Raising the min wage in CA is important, and I’m glad they did it.

      But you better check your hopes against reality.

      Min wage in CA right now is $10. It’s higher in certain cities. It will rise to $11 next year, and by $1 dollar each year after that, until it hits $15 in 2021. That’s a LONG wait!

      So do you think that in 2021, when $15 is effective, that the min wage earner, making by then $2,600 a month before taxes, SS, etc. (or maybe $2,100 net), can afford a $3000 apartment? Or even a $2,000 apartment? Or even a $1,500 apartment?

      Min wage won’t raise rents in the expensive metros on the list. Other factors might, but not min wage. You’re looking at the wrong end of the scale.

      • Ehawk says:

        Well, tell me how these people pay their rent now.. better yet tell me where they live now on 10/hr ?

      • DrJ says:

        Actually, a higher minimum wage might put upward pressure on rental prices since people ‘pool’ their bids for housing by going in with roommates. The roommate phenomenon also explains how people at lower wages stay in the area. They are paying some fraction of the median rental price. As someone renting in Oakland and being shocked by the rental price increase, this scares me because maybe people will just keep increasing the number of roommates they live with to stay in the area, thus supporting rental prices. Everyone I know has roommates, usually many of them. I know people well into their late 30s and even 40s in this area who still live with roommates if they are not married. It makes me want to leave the area and get a place of my own.

  16. Chris from Dallas says:


    There is no way I would buy or build an apartment in the DFW area. I have heard of cap rates as low as 4%.

    Luckily, we only rent houses and duplexes, so apartments act as a minor-league feeder system into our mid-range rentals.

    Demand for home rentals at every price range is very high across the entire Dallas-FortWorth metroplex. For mid-range rental houses, it is unbelievably hot.

    There has been almost no entry level housing built in the last 8 years. In last 12 months, IN A 50-MILE RADIUS of an area with a population of 7mm+ ONLY 4.1% of the new homes are affordable by the bottom 50% of households. (with today’s low rates, our local property taxes, a 5% down payment, etc., the median DFW household income of $58,190 can afford a $1,358/month payment for a $169,000 house)

    Here is the distribution:
    –> 68 houses built @ $120k or less
    –> 191 @ $120-$150k
    –> 291 @ $120-$169k
    –> 4,398 @ $169-$300k
    –> 3,297 @ $300-$400k
    –> 2,225 @ $400-$500k
    –> 1,888 @ $500-$750k
    –> 888 houses built @ $750k+

    WS Readers need to multiply these prices by 5-10x to compare with SanFran & Palo Alto.

    Here is an example of how hot the rental market is: 7 days ago we listed an updated brick home built in 1955 1,255sqft, 3 bedroom, 2 bathroom, 2-carport house in a below-average area (not bad, but it is a little below average).

    We are listing it at $1,097/month, a 30% increase over the last 3 years, but still $63/month less than the rest of the neighborhood.

    The current tenant is still there so people cannot see it or move in until next week.

    We already have 2,449 viewings online, literally hundreds of emails and calls, and 2 blind applications (haven’t even seen the house other than in the photos).

    And with 25,000 apartments built in 2014, 38,000 in 2015, and 50,000 this year, I expect future demand for reasonably affordable rental houses to get even stronger.

  17. frederick says:

    Its called a deflationary collapse get used to it the Japanese and Europeans have

  18. interesting says:

    in the rental price image, i couldn’t afford to live in any of those cities……not 1.

  19. kitten lopez says:

    today’s post from Wolf was so exciting i was speechless…and i went out and rode my bike in one of these sunny days where the colors of the mission houses POP and flowers everywhere and i screamed BUENOS DIAS! as i passed every single day laborer on the corner!

    i was speechless about this amazing rent news, til i read the comments. here goes:

    Chris from Dallas: you’re going to make a KILLING because no; there is no new affordable housing being built anywhere in the states. read Mathhew Desomond’s book, “EVICTED.” a lot of investors are now apparently trying to corner the low- to moderate- rental market because of this scarcity issue.

    remember, wasn’t there something about Warren Buffett investing in trailer parks awhile back? i thought it was a joke til i realized it’s eerily brilliant in bottom feeding blood sucking foresight.

    and EHawk via Appolyon: yes. the american dream is now living in an RV or your car. but WHERE to put it or park it??? zoning laws on land as well as laws in cities are sprouting up to make these options increasingly illegal. and there are no new trailer parks being built. maybe not til warren buffet builds future ones on old mall foundations or something. (see above book, “EVICTED” on this as well).

    Ehawk: also re “where do they [ppl on min wage] LIVE?”:
    many such people are doing sofas, closets, cars, tents. my best friend who’s taking care of me while i work on this other venture idea in our rent-controlled apartment on $16, he’s renting bicycles to tourists (who’s 51 and a former engineer at abbott labs and got laid off and couldn’t get another job as an engineer), he says there are grown men there who’ve lived at shelters with their families. others there don’t even have THAT. no one asks/no one offers. it’s not a problem til they smell bad then they’re out.

    but no one talks about this even among each other and they get treated like hell by the video-watching boss and want to be on salary for the guaranteed cash, even though they end up working or being on call 7 days a week, 12-16 hour days, getting much less than minimum wage.

    but people steal from him like crazy. one guy even used his own square paying device in the tablet to divert the customers’ funds to HIS account! brilliant.

    no one spits in rich folks’ water anymore. the resentment is becoming AMAZING. i was so mad when i lost my career and couldn’t find even a crappy job, i worried if i had to become a maid, i’d serve crushed glass to my employers. (i’m NOT kidding. i really must work so hard on this “being a decent person” thing.)

    la la la…

    it’s a GORGEOUS day! (really… it IS) city’s nice and quiet because everyone’s at burning man.

  20. Guido says:

    I am a renter in the San Mateo region of Bay Area. Next time before you get on San Mateo bridge, notice that there are some 800 apartments (that’s what I counted anyway) coming up right next to the freeway in Foster City. These are in addition to another complex (100 Grand) that came up a few months ago and is giving one month free (

    Then there is an apartment complex for senior citizens place that can easily be about 800 more (right next to the City Hall). They tried to get this building going back in ’08 and just when they decided to go ahead, the market crashed. It took them about 5 years to get it going again. Lennar is building them. Anyway, I noticed that the ads don’t say senior citizens anymore. You can check out the website yourself. It starts out by talking about senior citizens but then has some designed for active adults. I am guessing they are not getting much interest even as they are getting close to completion. The website:

    The joke around the place is that we can time the next crash to the inauguration of the Foster Square :).

    Then there is San Mateo on 92W (the other direction of San Mateo bridge), Delaware St. exit. They are putting together at least 3 huge office buildings. And they razed the old K-Mart to the ground only to put up an Apartment complex (there are building even as we speak).

    In Belmont, there used to a 7-eleven next to Mountain Mike’s on El Camino Real. One day, the 7-eleven closed as did the credit union that was busy until the day before. Now, the owner wants to build something there.

    There’s also construction going on around Hillsdale mall. A bunch of office and apartment buildings.

    I mentioned all these instances to catalog whatever I have seen. If others could start telling us what they know, we can plot them on Go-Ogle maps to get an idea where the storm will land.

    • Fesky says:

      By construction around Hillsdale Mall you probably meant Bay Meadows. The biggest project on Peninsula in decades:
      Three apt complexes are for rent right now and more to build.
      Also, the Delaware Station Park Green: will be having 599 residential units plus 10K of office space and 60K of retail. In addition to what is being built in Bay Meadows along the train tracks, it looks like the whole silicon valley will be relocating to to San Mateo:
      Its whopping 600K in office space alone plus retail.
      That is all for San Mateo, the town of 100K! And these are just two projects.
      I cannot wait to see the final results of this! Time to buy popcorn in bulk!

  21. Chris from Dallas says:


    As they say here in Texas…

    You’re a HOOT and funny as hell! Glad you are having a great day in one of the world’s most beautiful cities and best climates.

  22. kitten lopez says:

    aw shucks! thanks, Mr Chris from Dallas! you’re all heart for not hating me for inadvertently calling you a “bottom feeder” or “vampire” from my diatribes!

    for some reason, i get on with you folks from Texas. you must have crazy strong intense women over there or something because i NEVER scare anyone from Texas. (no matter how i TRY.)

    and just so you know– i tend to hate everyone equally nowadays. new age people. anyone with a pulse. they’re gonna suck eventually. even babies. so then i assume it and then i’m free to see the beauty in spite of it!

    see? i’m good in relationships, too. i’m not hitting ON you. nah. i’m about to site and write a PAPER love letter to the one man i’m in love with BACK. so i see only him now. but when i say i’m good in relationships, i can give BACK. even though i’m a leo and it’s EXCRUCIATINGLY HARD for me to NOT be a self centered narcissist.

    so check this out: i hate tenants, too. the assholes who’d treat my mom like a LANDLADY and screw her over. i hate the tenants who use their rent controlled apartments to screw over the landlord and neighbors, and sublet it on airbnb.

    i don’t hate the player; i hate the GAME.

    have a good night. now… onto my LOVE letter. (this love stuff is SO scary. i’m on here procrastinating because i don’t wanna be vulnerable and have my heart broken. or i hate waiting. basically, i hate being out of control yet AGAIN. this is the upside of losing everything and having NOTHING left to lose. especially your own face. i court embarrassment again like when i was a kid itching for a fight and an adventure. only now i channel that terror into other PEOPLE. yeah. the very people i claim to hate. my new Art with a capital “a” is trying to BE the change i wanna be. corny i know. but i believe this shit now that i’ve lost my illusions and see where ALL this is going. it’s not unrelated from this site AT ALL. what’s the POINT of saving and working and fretting and trying to forecast? we wanna take care of the ones we LOVE. people wanna hand shit down. that’s a form of LOVE as they see it. i’m trying to love clean. like how cheating sets everyone around on fire and pours salt in wounds. i wanna love messy so it’s like spray from a sneeze that won’t make you sick. a sneeze of LOVE. gross, i know.

    but i gave you my irritation with self entitled tenants. and yes. as an artist, i have actually LOVED my landlords for not making ME have to go out and be someone else to have a place to live. i used to hate my current landlord but now i send him love letters for not being a douche bag like i thought he was at first. now i think he’s a SAINT. he doesn’t know what to say. that’s okay. i’m his pitbull now. i tell tenants now to their faces i’ll report ’em next time they try and airbnb their place.

    good night, Mr Chris from Dallas. sorry i’m so wordy. i’m actually inspired and i type waaaay too fast. but thanks. i love you texans. when i was being a lesbian when i first got here, the ONLY woman i could stand being gay with was from Galveston. almost 20 years older than me and suave and funny as hell. amazing lover but the second thing i remember most is her saying just once, “it’s hotter than a whore in love.” and i didn’t care that she drank til she crawled on the carpet.

    you Texans can even make crawling look cool like a real country song. not one of those new fangled urban country ones. the twangy ones. yeah.

    on to my love letter!

  23. Donna says:

    Hi Guido, I live just off Highway 92 in San Mateo. The construction around here is nuts as you say. I just returned from the Hillsdale train station and stared at the demolished Sears, went to Trader Joe’s and passed the monstrous office buildings in progress, walked through an open house next door which was new, but low quality construction, asking $1,399.000. This 7 unit townhome complex, btw, was supposedly sold out as of February 2016 yet this one unit was just listed. Is someone reading Wolf Street or was the joint never sold out in the first place–it’s been awfully quiet over there.

    One more thing. I’m a teacher and my younger colleagues are leaving the bay area one by one.

  24. Joe says:

    Can somebody please tell me why they like living in San Francisco and Silicon Valley. I don’t get it. I can find lots of ways to have fun in any medium to large city.

    I get calls from Silicon Valley recruiters all the time and I would have to take a huge pay cut once you factor in the high tax rates, the living costs, the traffic, etc.

    • Wolf Richter says:

      San Francisco is one of the most wonderful cities in the world. That’s why. The cities in Silicon Valley, on the other hand, well, I don’t know either.

    • kitten lopez says:

      Joe, i would never DARE try to explain why i love it here in san francisco, or why anyone should be here. i don’t think that way. that’s just not a conversation worth having because you and Wolf value vastly different things if you would even dare ASK such a question. it’s a cookie-cutter QUESTION so be careful how you frame your WORLD with such lazy questions.

      i laugh because some folks, no–MOST folks–are fine with living in isolated communities with cars and garages and no spontaneous conversations with neighbors. only emails or texts. and that computer. it’s like a deity.

      you get socially flabby when you’re fine with the sameness and all that free porn.

      but it also says a TON about Mr Wolf, here, what kinda guy is that he’d deign to tell you why he loves it here, when most san franciscans are more like, “fine, yeah, it’s horrible; stay out.”

      in fact, even when my art school friend whispered this was the place to go in the early ’90s, he warned, “–but don’t tell ANYONE else.”

      i got it. i didn’t even WANT to leave philadelphia. i liked its invisibility in the shadow of nyc (=affordability when in art, time=freedom). but sometimes a place will just VOMIT you out of it, no matter how you try to claw your hold…it just is DONE with you.

      so i came to san francisco sight unseen. i hated it when i got here, but as was the inverse with my heartachingly beloved philadelphia, with it’s tiny cobble alleyways and freezing winters but fireplaces even in my huuuuge two-story two bedroom apartment art students passed around like a bong hit–this city clung on to ME for so long with love, i’m now forced to reciprocate and fight for IT.

      so you’re fine where you are. stay there. if you ask such a question, it’s remedial; there’s nothing here for you that you will not first need to find there.

      artists try to build the community with like minded people as long as possible. i told you why i think we’re all assholes. i’m at the head of the line. i have a lot to fight within myself to even get close to being as generous as Mr Wolf just was, in pitching this city to you.

      san francisco’s still as stunningly gorgeous as ever even with all the devastation tears raping and pillaging going on. that’s the magic of this place. it defies all logic. all the time.

      have a good weekend you all. and Joe– wherever you are, i’m sure it’s perfect for you. that’s beautiful. stay there and appreciate it while you’re there. there’s nowhere “cooler” to be. this is all only about money now.

      money’s not cool. never has been. but you can’t BUY this shit.


      that’s when i know life IS fair after all.

    • Edward E says:

      This morning was like San Francisco way over here… awakened briefly, could hear the refrigerator running off in the distance. Thoughts… the fridge cannot make the house shake! What the… 5.6 magnitude earthquake at Pawnee, Oklahoma and it was trying to roll us out of bed way over here, be dang… we have artists too, less than a mile away at Heartsong Retreat. Occasionally we jam together.

    • Fesky says:

      Joe, there is such thing as California exodus. 2004-2014 approx 5 million people moved out of California. I do not know exact numbers for the recent years but I’ve heard it turned into stampede this year. Our family would move in a heartbeat if not for the fact that noone is really waiting for us anywhere and ideally we would prefer to get out of the country altogether. But we are not hoping anymore, we are expecting our move out of here soon.

      • Joshua says:

        Best of luck to you – I know how hard it is to leave once you get there… Not to mention, when you live in California, no one understands why you’d want to leave. Funny thing, is once you leave, you can’t understand why anyone would want to go back.

        We lived in Monterey, CA for 8 years (2008-2015). Our rent went up 3 times in 2014 alone – so when I was offered a position in the SouthEast with a pay bump, I took it immediately.

        I now own an awesome house (paid cash). Kids are in solid schools, and my stress levels have dropped dramatically. We did this not only for cost of living, but because we have a growing LLC that was getting raped by CA tax wise.

        A lot of people with online business are leaving. You are also seeing an exodus of big tech as well.

  25. Chicken says:

    If we have massive crash like some predict, I’d guess that would mean rapid deflation so by 2021, $ might be a high wage?

    Obtaining a college degree wouldn’t be so expensive if government wasn’t driving up the cost in various ways such as subsidies, cheap loans and regulatory requirements.

    Like rent control for instance, Argentina tried to force people into selling below cost and see where that got them, no toilet paper on the shelf.

  26. david says:

    Colorado Springs is still nuts on rent increases ( percent wise) and anything for sale under $300k flies off the market. The high dollar stuff in the mountains are falling off a cliff. 1%ers are starting to balk.

  27. Enquiring Mind says:

    The chart showing rents by city for 1BR and 2BR was jarring for another reason. The relative (percentage) and absolute (dollar) difference in rents for the addition of another bedroom was surprising. Once upon a time, young people were encouraged to get a roommate, reflecting the saying that two could live as cheaply as one (split the rent and utilities, add in own food, etc). That is a difficult situation in many cities now.

  28. mile says:

    if, as a banker for the fractional reserve bank system that prints up on average 38 debt dollars for every dollar borrowed that compete equally with every dollar of savings and bid against them and destroy their value, i had 10,000 (ten thousand) 10,000 dollar houses with an average price of 10,000 dollars and a median price of 10,000 dollars and a total market value of 100,000,000 (one hundred million dollars) and i wanted more, i would lend 50,000,000 (fifty million) dollars to an insider crony to “buy” one of those 10,000 dollar houses that lets me print up 1,900,000,000 (one billion nine hundred million dollars) or nearly ten times the entire housing markets value and thus drive up the average price of the remaining houses to 14,998 (fourteen thousand nine hundred and ninety eight dollars) and a median “skyrocketing” median price of 25,009,998 (twenty five million nine thousand and nine hundred and ninety eight dollars) thus needing my spending some of the fractional reserve printed up dollars to pay off the “educators” to dumb down the public so as they know not the difference between median and average, and the press to parrot only the median skyrocketing price narratives, so to force the mass of peoples to demand that i lend them 250,000 (two hundred and fifty thousand dollars) or more to “buy” the incredibly low priced, compared to the skyrocketing house median prices and be grateful for the life of enslavement to debt i offer them, always knowing someone will pay a greater price given a paid off government and its toadies and price “supports” , with all opinions of this sort sensored from “news” articles concerning business and real estate

  29. Joshua says:

    I’m seeing rents go up here in Atlanta. Just turned in the keys to the house we were renting. We were locked in around $1450/mo, now it’s $1550.

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