San Francisco rents plunged by stunning 27% in 18 months. But in 5 big cities, rents jumped by 20%+. But in some of the cheapest cities, rents dropped.
By Wolf Richter for WOLF STREET.
The rent drama in the US is displaying what is happening in the working world: massive shifts are under way, powered by work-from-home which has turned into work-from-anywhere, and other factors. Rents are responding to the ebbs and flows of the people.
San Francisco rents, the most expensive in the US, in a stunning downward spiral.
The median asking rent for one-bedroom apartments in San Francisco fell by another 3.6% in November from October, to $2,700, bringing the plunge since April to $800 or 23%, according to data from Zumper’s Rent Report. From the peak in June 2019, one-bedroom asking rents have now plunged by 27%, or by $1,020 per month:
During the dotcom bust, there was a similar plunge in rents – but it took three years. Measured by a combination of different data sets by Patrick Carlisle, Chief Market Analyst at Compass in San Francisco (rents, unlike home prices, are not universally tracked), the average asking rent plunged by 25% from Q1 2001 through Q1 2004, which was the bottom. Now San Francisco has passed the point, but it has done so in just 17 months.
The median asking rent for 2-BR apartments in San Francisco dropped by 3.3% in November from October, to $3,570, and by 21% since April. Since June 2019, 2-BR rents have plunged by 26%, or by $1,230 per month.
This median 2-BR asking rent has now dropped below where the 1-BR asking rent had been in June last year. In other words, people that signed a lease for a median 1-BR apartment in June 2019 could now sign a lease for a median 2-BR, and save money. The free upgrade! And lots of renters are now chasing after the free upgrades, amid a huge number of vacancies.
Zillow lists 3,735 rentals in the City at the moment. That’s more than double the 1,851 listings in May 2018 and more than triple the 1,149 listings in August 2016. There is lots of choice for renters seeking a “free upgrade” or a cost cut. And this choice – the sheer availability – is causing churn, with people moving from one place to another, just to get a better deal.
No one knows yet how many people have left San Francisco and how many people have moved into San Francisco since March, but everyone agrees that there has been a significant net outflow, and that the population is shrinking, triggering a glut of available housing, including a historic glut of condos for sale along with a 13% drop in condo prices.
And the churn is huge: One indication is the number of change-of-address requests that the US Postal Service receives. From March 1 through November 1, the USPS received 124,131 change-of-address requests originating in San Francisco zip codes, according to USPS data obtained by Public Comment. About 34,000 (28%) of those requests were for new addresses within San Francisco – and a portion of them were people looking for that “free upgrade.”
But around 89,000 of the requests were for addresses outside San Francisco, some within the Bay Area, others far afield, indicating roughly how many people left the City.
Some people also moved into the City during this time, but with travel restrictions in place, particularly between San Francisco and other countries, and with working-from-home or working-from-anywhere being the rule in the City, the influx was likely slim. So, rents plunge.
Despite these dynamics and the plunge in rents, San Francisco remains the most ludicrously expensive rental market in the US, largely because rents in New York City, the second most expensive market, are dropping in near-parallel.
These median asking rents here do not include concessions, such as “two months free” or “three months free” that landlords use to entice potential tenants with lower effective rents – getting 15 months for the price of 12 months – while being able to show their lenders the higher nominal rents.
New York City rents plunged.
In New York City, the median asking rent for 1-BR apartments dropped 3.1% in November from October, to $2,470, and by 16.8% year-over-year, according to Zumper data. Since July 2019, 1-BR rents have dropped by 19%:
The median asking rent for 2-BR apartments dropped by 3.4% in November from October and by 18.4% from a year ago, to $2,800.
These rent declines are explained by the exodus from apartment towers, largely in Manhattan. And the numbers can be stunning. For example, the occupancy rate at the iconic “New York by Gehry” 76-story tower in Manhattan with 899 apartments plunged from 98% in 2019 to just 74% by September 2020, with roughly 234 units suddenly vacant, which shows how fast and massive the exodus has been!
“Median” asking rent is the middle, half of the rents are higher and half are lower. “Asking rent” is the advertised rent of apartments for rent, but does not include concessions.
Zumper collects this data from the Multiple Listings Service (MLS) and other listings, including its own listings, in the 100 largest markets of the US. The data tracks rentals in apartment buildings, including new construction, but doesn’t track single-family houses for rent and condos for rent.
The 17 most expensive rental markets.
The table below shows the most expensive major rental markets by median asking rents. The shaded area shows peak rent and the changes from peak rent. The black entries in the shaded area indicate rent records set in November. Note the 13 double-digit drops among 1-BR rents from their respective peaks, of the 17 entries:
The 100 largest rental markets: jumps & plunges
While rents are spiraling down in some cities, including some of the already cheapest rental markets in the middle of the country (for example, Akron, Wichita, or Tulsa), in other cities rents are exploding higher, largely driven by the sudden shifts brought on by “work from anywhere,” with people leaving some places and storming into other places. And in other cities, rents are not moving much at all.
The 38 Cities were rents jumped between 5% and 24%.
Of the 100 largest rental markets, rents increased in 64 of them on a year-over-year basis. In 38 of them, rents increased by 5% or more. In 19 of them, rents jumped by 10% or more. And in five of them, rents skyrocketed by over 20%, topping out with a 23.8% surge in St. Petersburg, FL. How Newark (+21.2%) got into this select group is perhaps explained by New York City rent refugees.
| 38 Cities where 1-BR rents jumped 5%+ YoY | |||
| 1 | St Petersburg, FL | $1,300 | 23.8% |
| 2 | Cleveland, OH | $1,160 | 23.4% |
| 3 | St Louis, MO | $1,050 | 22.1% |
| 4 | Indianapolis, IN | $1,000 | 22.0% |
| 5 | Newark, NJ | $1,600 | 21.2% |
| 6 | Fresno, CA | $1,130 | 18.9% |
| 7 | Detroit, MI | $820 | 18.8% |
| 8 | Tucson, AZ | $780 | 18.2% |
| 9 | Sacramento, CA | $1,460 | 15.9% |
| 10 | Chattanooga, TN | $1,040 | 15.6% |
| 11 | Albuquerque, NM | $780 | 13.0% |
| 12 | Jacksonville, FL | $1,000 | 12.4% |
| 13 | Richmond, VA | $1,200 | 12.1% |
| 14 | Boise, ID | $1,110 | 12.1% |
| 15 | Providence, RI | $1,570 | 11.3% |
| 16 | Raleigh, NC | $1,110 | 11.0% |
| 17 | Des Moines, IA | $910 | 11.0% |
| 18 | Augusta, GA | $830 | 10.7% |
| 19 | Spokane, WA | $860 | 10.3% |
| 20 | Henderson, NV | $1,240 | 9.7% |
| 21 | Las Vegas, NV | $1,050 | 9.4% |
| 22 | Rochester, NY | $1,000 | 8.7% |
| 23 | Houston, TX | $1,120 | 7.7% |
| 24 | Virginia Beach, VA | $1,130 | 7.6% |
| 25 | Mesa, AZ | $990 | 7.6% |
| 26 | Durham, NC | $1,150 | 7.5% |
| 27 | Chandler, AZ | $1,300 | 7.4% |
| 28 | Kansas City, MO | $1,020 | 7.4% |
| 29 | Scottsdale, AZ | $1,550 | 6.9% |
| 30 | Greensboro, NC | $770 | 6.9% |
| 31 | Fort Lauderdale, FL | $1,700 | 6.3% |
| 32 | Tampa, FL | $1,190 | 6.3% |
| 33 | Baltimore, MD | $1,220 | 6.1% |
| 34 | Gilbert, AZ | $1,300 | 5.7% |
| 35 | Anchorage, AK | $950 | 5.6% |
| 36 | Cincinnati, OH | $950 | 5.6% |
| 37 | Norfolk, VA | $970 | 5.4% |
| 38 | Dallas, TX | $1,250 | 5.0% |
The 30 Cities were rents dropped.
The median asking rent in November for 1-BR apartments fell in 30 of the largest rental markets, compared to rents in November 2019. In 19 of those markets, rents fell by 5% or more year-over-year, topped by double-digit declines in the usual suspects, plus in a couple of new suspects, Buffalo and formerly red-hot Nashville. The Oil Patch also has a number of cities on this list.
And it’s not just the expensive markets were rents are dropping, but also in some of the cheapest, including Akron, Wichita, and Tulsa:
| Cities where 1-BR rents dropped YoY | |||
| 1 | San Francisco, CA | $2,700 | -22.6% |
| 2 | Oakland, CA | $2,000 | -19.0% |
| 3 | Seattle, WA | $1,540 | -17.2% |
| 4 | New York, NY | $2,470 | -16.8% |
| 5 | San Jose, CA | $2,090 | -14.7% |
| 6 | Boston, MA | $2,150 | -14.0% |
| 7 | Washington, DC | $1,920 | -12.7% |
| 8 | Buffalo, NY | $1,000 | -12.3% |
| 9 | Nashville, TN | $1,260 | -11.3% |
| 10 | Los Angeles, CA | $2,000 | -9.5% |
| 11 | Akron, OH | $570 | -9.5% |
| 12 | Irving, TX | $1,010 | -8.2% |
| 13 | Madison, WI | $1,120 | -6.7% |
| 14 | Denver, CO | $1,420 | -6.6% |
| 15 | Honolulu, HI | $1,500 | -6.3% |
| 16 | Wichita, KS | $630 | -6.0% |
| 17 | Syracuse, NY | $800 | -5.9% |
| 18 | Minneapolis, MN | $1,300 | -5.8% |
| 19 | Salt Lake City, UT | $1,040 | -5.5% |
| 20 | Philadelphia, PA | $1,440 | -4.0% |
| 21 | Laredo, TX | $720 | -4.0% |
| 22 | Plano, TX | $1,140 | -3.4% |
| 23 | Orlando, FL | $1,210 | -3.2% |
| 24 | Tulsa, OK | $650 | -3.0% |
| 25 | Milwaukee, WI | $1,090 | -2.7% |
| 26 | Pittsburgh, PA | $1,140 | -2.6% |
| 27 | Lincoln, NE | $790 | -2.5% |
| 28 | Corpus Christi, TX | $840 | -2.3% |
| 29 | Portland, OR | $1,400 | -2.1% |
| 30 | Colorado Springs, CO | $990 | -1.0% |
The 25 cities with the Cheapest 1-BR rents:
In one quarter of the largest rental markets, the median asking rent for 1-BR apartments was $850 or below. These are the lowest-cost cities to rent in among the 100 biggest markets, and some nice cities too, and they would be great for some folks that are now working from home.
This includes some markets that the WFH crowd has already discovered and where rents are now surging, such as Detroit (+18.8% year-over-year) or Tucson (+18.2%), and other markets that the WFH crowd is still trying to discover, and where rents are falling, such as Akron (-9.5%), Syracuse (-5.9%), or Tulsa (-3.0%):
| The 25 Cities with the Cheapest 1-BR rents | |||
| 1 | Akron, OH | $570 | -9.5% |
| 2 | Wichita, KS | $630 | -6.0% |
| 3 | Tulsa, OK | $650 | -3.0% |
| 4 | Lubbock, TX | $650 | 0.0% |
| 5 | Shreveport, LA | $650 | 1.6% |
| 6 | El Paso, TX | $700 | 4.5% |
| 7 | Laredo, TX | $720 | -4.0% |
| 8 | Lexington, KY | $740 | 4.2% |
| 9 | Oklahoma City, OK | $760 | 4.1% |
| 10 | Greensboro, NC | $770 | 6.9% |
| 11 | Albuquerque, NM | $780 | 13.0% |
| 12 | Tucson, AZ | $780 | 18.2% |
| 13 | Lincoln, NE | $790 | -2.5% |
| 14 | Syracuse, NY | $800 | -5.9% |
| 15 | Tallahassee, FL | $800 | 0.0% |
| 16 | Winston Salem, NC | $800 | 1.3% |
| 17 | Baton Rouge, LA | $820 | 3.8% |
| 18 | Knoxville, TN | $820 | 1.2% |
| 19 | Detroit, MI | $820 | 18.8% |
| 20 | Omaha, NE | $830 | 3.8% |
| 21 | Augusta, GA | $830 | 10.7% |
| 22 | Bakersfield, CA | $840 | 3.7% |
| 23 | Corpus Christi, TX | $840 | -2.3% |
| 24 | Columbus, OH | $850 | 1.2% |
| 25 | Memphis, TN | $850 | 4.9% |
The Largest 100 rental markets.
The table below shows the top 100 cities, with 1-BR and 2-BR median asking rents in November, in order of 1-BR rents from most expensive to least expensive. It also shows year-over-year percent changes in rents. You can search the list via the search function in your browser. If your smartphone clips this 6-column table on the right, hold your device in landscape position:
| Rents, Top 100 Cities | 1-BR $ | Y/Y % | 2-BR $ | Y/Y % | |
| 1 | San Francisco, CA | $2,700 | -22.6% | $3,570 | -20.7% |
| 2 | New York, NY | $2,470 | -16.8% | $2,800 | -18.4% |
| 3 | Boston, MA | $2,150 | -14.0% | $2,600 | -11.9% |
| 4 | San Jose, CA | $2,090 | -14.7% | $2,650 | -8.6% |
| 5 | Oakland, CA | $2,000 | -19.0% | $2,600 | -13.0% |
| 6 | Los Angeles, CA | $2,000 | -9.5% | $2,720 | -12.3% |
| 7 | Washington, DC | $1,920 | -12.7% | $2,700 | -10.0% |
| 8 | San Diego, CA | $1,790 | 0.6% | $2,340 | -0.4% |
| 9 | Miami, FL | $1,710 | 0.0% | $2,280 | 3.6% |
| 10 | Fort Lauderdale, FL | $1,700 | 6.3% | $2,200 | 1.9% |
| 11 | Santa Ana, CA | $1,700 | 2.4% | $2,290 | 8.0% |
| 12 | Anaheim, CA | $1,660 | 2.5% | $1,990 | -2.5% |
| 13 | Newark, NJ | $1,600 | 21.2% | $1,800 | 16.1% |
| 14 | Providence, RI | $1,570 | 11.3% | $1,800 | 11.1% |
| 15 | Long Beach, CA | $1,550 | 0.0% | $2,100 | 5.0% |
| 16 | Scottsdale, AZ | $1,550 | 6.9% | $2,100 | 1.4% |
| 17 | Seattle, WA | $1,540 | -17.2% | $2,030 | -11.7% |
| 18 | Honolulu, HI | $1,500 | -6.3% | $2,100 | 0.0% |
| 19 | Chicago, IL | $1,470 | 2.1% | $1,790 | 5.3% |
| 20 | New Orleans, LA | $1,470 | 4.3% | $1,700 | 9.7% |
| 21 | Atlanta, GA | $1,460 | 2.1% | $1,900 | 4.4% |
| 22 | Sacramento, CA | $1,460 | 15.9% | $1,800 | 24.1% |
| 23 | Philadelphia, PA | $1,440 | -4.0% | $1,700 | 3.7% |
| 24 | Denver, CO | $1,420 | -6.6% | $1,910 | 0.5% |
| 25 | Portland, OR | $1,400 | -2.1% | $1,750 | 2.9% |
| 26 | Gilbert, AZ | $1,300 | 5.7% | $1,570 | 9.8% |
| 27 | Chandler, AZ | $1,300 | 7.4% | $1,540 | 8.5% |
| 28 | Minneapolis, MN | $1,300 | -5.8% | $1,780 | -2.2% |
| 29 | St Petersburg, FL | $1,300 | 23.8% | $1,740 | 24.3% |
| 30 | Austin, TX | $1,290 | 4.9% | $1,600 | 3.2% |
| 31 | Nashville, TN | $1,260 | -11.3% | $1,430 | -2.7% |
| 32 | Dallas, TX | $1,250 | 5.0% | $1,680 | 5.0% |
| 33 | Henderson, NV | $1,240 | 9.7% | $1,370 | 3.0% |
| 34 | Baltimore, MD | $1,220 | 6.1% | $1,530 | 9.3% |
| 35 | Orlando, FL | $1,210 | -3.2% | $1,400 | 0.0% |
| 36 | Charlotte, NC | $1,200 | 0.0% | $1,410 | 8.5% |
| 37 | Richmond, VA | $1,200 | 12.1% | $1,380 | 3.0% |
| 38 | Tampa, FL | $1,190 | 6.3% | $1,410 | 6.0% |
| 39 | Chesapeake, VA | $1,180 | 3.5% | $1,250 | 1.6% |
| 40 | Cleveland, OH | $1,160 | 23.4% | $1,240 | 24.0% |
| 41 | Durham, NC | $1,150 | 7.5% | $1,280 | 7.6% |
| 42 | Pittsburgh, PA | $1,140 | -2.6% | $1,340 | -0.7% |
| 43 | Plano, TX | $1,140 | -3.4% | $1,510 | -5.0% |
| 44 | Fresno, CA | $1,130 | 18.9% | $1,360 | 15.3% |
| 45 | Virginia Beach, VA | $1,130 | 7.6% | $1,280 | 4.9% |
| 46 | Madison, WI | $1,120 | -6.7% | $1,400 | 5.3% |
| 47 | Houston, TX | $1,120 | 7.7% | $1,380 | 7.8% |
| 48 | Boise, ID | $1,110 | 12.1% | $1,210 | 0.8% |
| 49 | Raleigh, NC | $1,110 | 11.0% | $1,290 | 9.3% |
| 50 | Aurora, CO | $1,100 | 0.0% | $1,460 | 5.0% |
| 51 | Milwaukee, WI | $1,090 | -2.7% | $1,260 | 3.3% |
| 52 | Reno, NV | $1,060 | 1.0% | $1,380 | 6.2% |
| 53 | Fort Worth, TX | $1,060 | 1.0% | $1,380 | 11.3% |
| 54 | Las Vegas, NV | $1,050 | 9.4% | $1,210 | 4.3% |
| 55 | St Louis, MO | $1,050 | 22.1% | $1,260 | 11.5% |
| 56 | Chattanooga, TN | $1,040 | 15.6% | $1,200 | 17.6% |
| 57 | Salt Lake City, UT | $1,040 | -5.5% | $1,340 | 0.8% |
| 58 | Phoenix, AZ | $1,020 | 3.0% | $1,280 | 2.4% |
| 59 | Kansas City, MO | $1,020 | 7.4% | $1,170 | 12.5% |
| 60 | Irving, TX | $1,010 | -8.2% | $1,340 | -3.6% |
| 61 | Buffalo, NY | $1,000 | -12.3% | $1,140 | -20.3% |
| 62 | Rochester, NY | $1,000 | 8.7% | $1,200 | 10.1% |
| 63 | Jacksonville, FL | $1,000 | 12.4% | $1,200 | 18.8% |
| 64 | Indianapolis, IN | $1,000 | 22.0% | $1,050 | 16.7% |
| 65 | Mesa, AZ | $990 | 7.6% | $1,240 | 8.8% |
| 66 | Colorado Springs, CO | $990 | -1.0% | $1,290 | 7.5% |
| 67 | Norfolk, VA | $970 | 5.4% | $1,030 | 7.3% |
| 68 | Anchorage, AK | $950 | 5.6% | $1,200 | 4.3% |
| 69 | Cincinnati, OH | $950 | 5.6% | $1,160 | -5.7% |
| 70 | Glendale, AZ | $930 | 2.2% | $1,170 | 10.4% |
| 71 | San Antonio, TX | $930 | 3.3% | $1,140 | 3.6% |
| 72 | Des Moines, IA | $910 | 11.0% | $960 | 6.7% |
| 73 | Arlington, TX | $900 | 3.4% | $1,180 | 6.3% |
| 74 | Louisville, KY | $900 | 4.7% | $970 | 2.1% |
| 75 | Spokane, WA | $860 | 10.3% | $1,120 | 14.3% |
| 76 | Columbus, OH | $850 | 1.2% | $1,100 | 3.8% |
| 77 | Memphis, TN | $850 | 4.9% | $900 | 5.9% |
| 78 | Bakersfield, CA | $840 | 3.7% | $1,050 | 12.9% |
| 79 | Corpus Christi, TX | $840 | -2.3% | $1,110 | 5.7% |
| 80 | Omaha, NE | $830 | 3.8% | $1,090 | 11.2% |
| 81 | Augusta, GA | $830 | 10.7% | $920 | 10.8% |
| 82 | Baton Rouge, LA | $820 | 3.8% | $940 | 8.0% |
| 83 | Knoxville, TN | $820 | 1.2% | $950 | 1.1% |
| 84 | Detroit, MI | $820 | 18.8% | $980 | 21.0% |
| 85 | Syracuse, NY | $800 | -5.9% | $1,010 | 0.0% |
| 86 | Tallahassee, FL | $800 | 0.0% | $950 | 5.6% |
| 87 | Winston Salem, NC | $800 | 1.3% | $870 | 4.8% |
| 88 | Lincoln, NE | $790 | -2.5% | $920 | 0.0% |
| 89 | Albuquerque, NM | $780 | 13.0% | $970 | 19.8% |
| 90 | Tucson, AZ | $780 | 18.2% | $1,020 | 18.6% |
| 91 | Greensboro, NC | $770 | 6.9% | $900 | 8.4% |
| 92 | Oklahoma City, OK | $760 | 4.1% | $920 | 5.7% |
| 93 | Lexington, KY | $740 | 4.2% | $900 | -2.2% |
| 94 | Laredo, TX | $720 | -4.0% | $950 | 0.0% |
| 95 | El Paso, TX | $700 | 4.5% | $850 | 7.6% |
| 96 | Tulsa, OK | $650 | -3.0% | $820 | -2.4% |
| 97 | Lubbock, TX | $650 | 0.0% | $810 | 2.5% |
| 98 | Shreveport, LA | $650 | 1.6% | $750 | 7.1% |
| 99 | Wichita, KS | $630 | -6.0% | $770 | 6.9% |
| 100 | Akron, OH | $570 | -9.5% | $730 | 4.3% |
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OMG, just make it stop! Please, make it stop!
Many people’s wages are so low in rural areas that any price increase is going to create more homeless. In fact I wonder if lower rents in places like Akron Ohio are an indicator of that. Akron was kind of an armpit- probably still is for all I know. Apologies to any in Akron.
The only way poor people can survive is to live someplace where people with money will never want to go. Six months of snow in the winter, black flies in the spring, and mosquitoes in the summer are enough to send most Massholes back to their $2000 a month apartments and winter parking spot fights.
Even a place like Akron would take half my pension. And all of my sanity, what is left of it.
Uncle Sam Land mindlessly destroys rural life and never considers for a moment, where will food, fiber, and toilet paper come from when the rural workers are gone. Are the newly-transplanted “media influencers” gonna pick up the slack? Would they even know which end of a hammer to hold?
A lot of places in California are so expensive that almost all workers can’t afford to live there. I’ve read online BO Sups and Chamber of Commerce meetings with some glee after having had to move out of some of them. They were trying to brainstorm ways to accommodate worker’s living spaces. Not having much luck. No one to clean their toilets, mind the store or wipe their parent’s butts.
Here where I live in a pot growing area some people regularly accommodate seasonal workers in tents on their land with no running water or electricity. 20 miles out, no car. Occasionally it snows. 12+ hour days.. There just happens to be a lot of armed robbery- work related or not, and several workers have actually killed their employers. C’est la vie. Kind of like the good old days before 1870.
I’m guessing you’re in northern NH or Maine. It’s beautiful, but I’d personally rather not live there again mostly because of the black flies and mosquitoes. Clouds of them. Here’s hoping they keep gentrification away from you.
“tents on their land with no running water or electricity”
That is OK for a weekend, but not much longer. If Dear Leaders had any brains they would setup campgrounds like the “USDA Migrant Worker Camp” shown in “Grapes of Wrath”. Residents could pay small fees or work a few hours to maintain the place. Far from ideal, but much safer than a hobo camp next to the river.
Yes on my location. I grew up in NH, 40 miles from Boston. In the early 1960s the interstate came through and houses sprouted like weeds. The apple orchard I worked in as a kid is now Apple Tree Mall. The Hood diary farm is now Hood Country Club. Uggh. And of course no one who grew up there can now afford the outrageous housing prices.
With the rising numbers of Internally Displaced persons, maybe the UN will set up refugee camps.
TT, I went to high school right by you. When I was politically active at some events the cops had records on people and thought I was one of them. LOL.
High rents mean that an area is so desirable to live that there is a housing shortage. However, it is likely that working class people find the area desirable for the same reason that wealthy find it desirable. Also, wages for workers are substantially higher.
The problem is not a structural one as supply and demand wil create housing for workers. The economics are sound. The problem is frictional. The time it takes to build the housing and the permits/construction required takes forever. It takes a long time to respond to this demand. San Francisco is essentially decades behind. Many cities have the same problem: housing has so many rules and regulations that getting anything built takes years.
If you were allowed to build 100 story towers in San Francisco (or whatever the maximum earthquake limit is), there would swiftly be downward pressure on rent prices.
Displacement happens. Just ask the Native Americans who lived on that land before you did.
Zan Tetsu, my ancestors intermarried with Native peoples, armed them and spoke their languages.
Displacement destroys all cultures. It’s not something anyone should be proud of. And most certainly not within their own country. A country that destroys it’s own culture is an abomination.
I remember my first “real job.”
The first day I worked with the superintendent the first thing he said to me was, “why are you holding the hammer like that?”
I must have been nervous because I still remember.
I hated that mean old SOB at the time, but now I know that I owe him.
I hear ya. When I was in college I worked at a fruit cannery one summer; the supe was a Southern guy who probably didn’t make it past the ninth grade, but he’d worked his way up to a salaried/supervisory job. He rode my ass like a cheap mule, but every time a more important/critical job opened up–machine greaser, loader/conveyor operator, etc.–he’d put me on it, with a commensurate pay increase (this did not sit well with the union lifers who were still doing the same grunt jobs after decades). I’m sure he didn’t much care for college-boy me, but his salary and ranking depended on how many cans of peaches and tomatoes his lines produced, and he wanted someone who could do the job (and show up more than three times a week).
Too many folks seem to hold a hammer in the middle. I was about 7 when my Dad explained the leverage of a hammer.
Unfortunately you are right.You are being replaced with:migrant workers,automated tractors/conveyorbelts,,selfdriving cars or trucks,MegaBigAG,Bigbox stores/amazon/ebay replaced mainstreet,Mexico and China replaced Detroit/Flint autoshops,u.s.p.office has been ceding jobs$ to Fedex and UPS.You are insightful regarding the more affordable locales.I figured that out decades ago while living in Chicago,seeing everything go up,up,up in cost while basic daily living was like living in a jungle having to fight for a safe decent parkingspace either by the apt. Or maybe near a movie theatre or Anywhere near a museum.Everything became an expensive,time-consuming fight.You have to ask yoursrlf,”Is This how I want to spend my time on this planet?”Moved to Vegas,then Chicago burbs,now in craphole smaller IL. Town with many problems,but know-it-all,smarmy neighbors is not one of them.
”Is This how I want to spend my time on this planet?”
I read someplace that we spend most of our lives either working to get little pieces of green paper, or working to keep other people from taking them.
I gre up in Iowa. Big AG and dupont with their genetically modified crops that lost longer and produce more yield have displaced small scale farmers.
Corn is so cheap that they turn it into sugar (coen syrup) and its literally cheaper then cane sugar. They had to introduce policy to turn corn into biofuel because we over produce so much of it.
Corn sells for $4 for 56 pounds on the market. It will literally cost you more to move it.
And the majority of corn isn’t even for human consumption. Its sold to other farmers to feed their live stock. Which is also heavily over saturated. Milk is so over produced that the farmers lobbied the government to put out propaganda to get everyone to drink milk. Then we put cheese in everything. Because we have over produced so much cheese, most places are offering double cheese on everything for free because it literally costs them pennies. Wait, we have cheap food, so why not sell it over seas? We literally export 15% of our corn and its still dirt cheap.
Farmers have been losing out to big AG for the last 20 years just due to the GMO seeds being so much more efficient that you literally can’t farm without them.
Farmers needs are largely trade related. Most countries protect their farmers by protectionism to drive prices up so they can profit.
Here in Oz when you go to a supermarket and visit the deli you can see little signs telling you where the item is from……
And you’d be surprised that A LOT of the items have imported stuff in them.
For example, ‘streaky bacon” which is made from ‘at least 15% domestic ingredients’………….that must be the water they inject or soak it in to increase the weight.
(No kidding – it is Christmas season and the supermarkets here always push hams – and of course they inject water into them to increase the weight. There was even an article on it in the big left wing rag this week.)
Mexican and Chinese garlic, canned beans from New Zealand, etc, etc. (Ozzie produced garlic is A$25 a kilo, the imported stuff is about 1/10 that price.)
A few years back one the companies importing frozen berries from China had to recall all their products because of a food poisoning scare. Yep, we even import that stuff from China.
(I used to grow my own raspberries until we had a strech of several years of heat waves which decimated them. They don’t do well when the temp hits over 40 C with strong winds. Had a nice patch too. I waited too long to buy new plants this year and it looks like the weather would have been perfect for them.)
Fish? Even a lot of that is imported too. Blue Grenadier from New Zealand and even that old Aussie favourite, Barramundi, from Vietnam. And speaking of Vietnam, that is where most of our shrimp (prawns to us) come from.
I do miss the northern pike and walleye pike we used to catch in Minnesota both in summer and winter. That fish caught in winter was the best tasting fresh water fish in the world. Ice fishing anyone?
There must be some kind of friction with China in regard to shrimp too as I have seen domestic shrimp show up more often in the supermarkets and these are even decent size unlike that other stuff. Not the same size as the kuruma ebi in Japan, but starting to get there. Of course the price is a lot higher than the imported stuff.
People here brag about ‘how good the food we produce is’, but sorry it really isn’t. Even the best asparagus is exported overseas and when in Japan last time I could see the size and quality difference to the stuff we get here.
The asparagus they were selling in the Japanese supermarket was even grown just up the road from us – about 15 klicks away from where we live!!! Took a photo of it too.
Dried black beans? Imports from Canada. “Juice” – imported and reconstituted (You can buy the ‘fresh stuff’ in the frig section at two to three times the price.)
Honey? A few years back we had all those fires which decimated honey production here. A lot of companies were caught buying imported ‘honey’ from guess where (Yep, China) and mixing it into their products and passing it off as ‘domestic’ honey. What they imported wasn’t 100% honey, but some mixed and fake crap.
(This lockdown stopped us from buying directly from the usual producer which we usually do. If you ever get a chance to taste REAL Australian honey the Yellow Box variety is outstanding.)
And on and on……………
I heard armpits can be sexy, but only when female and French.
Eeew!
Thank you As far as Im concerned they are all vastly inflated and need to drop ALOT more to reflect reality
Do you have some concrete examples of your assertion that rents in rural areas are far above wage income?
$600 is 82.5 hours of work even at federal minimum wage. Even with taxes, it is well under 3 weeks work @ 40 hours a week.
And that assumes 1 person paying the rent vs. say, 2 people working while sharing a 2 bedroom place – much less the communes that sprang up in SF in the peak years.
I would totally agree that this isn’t a great life, but isn’t literal starvation either.
“it is well under 3 weeks work @ 40 hours a week.”
I think you just did the math for yourself if you think about it. Add car, necessary to go to work in rural areas, clothes, food (which is higher in rural areas), insurance, monthly phone, utilities etc.
Other than that, I don’t have time to pull stats from the internet. But you can pick any area, especially on the west coast and easily do it for yourself. Or better yet you could talk to fast food and store clerks and ask them directly.
Few people on minimum wage jobs work 40 hrs at one job. Instead they have to piece together a living from several jobs with constantly changing hours, so income is uneven and unpredictable, but it is the worker’s own fault that they can’t plan a budget and survive on limited income.
As Lynn stated, rural transportation is a real burden. I can’t drive anymore and I can’t afford a road vehicle anyway. The few times a year I go to town costs $40 round trip for a taxi. Maybe that is a typical Uber fee, I don’t know, having never used one. But it’s way more than I could afford to do five days a week.
Fuel and electricity are higher in rural areas, too. I remember when crude oil hit $150 a barrel, heating oil cost over $4 a gallon. That adds up fast, when filling a standard 275 gallon oil tank.
If rents in San Francisco drop another 50%, I’m definitely moving in.
Rent heck! Find me a depressed unit that I can buy!
OK! I suggest 3rd and Ingalls avenue. New streetcar line to downtown, kind of ok weather. Pro tip for home buyers/renters, see those big black circles in intersections easily visible from Google Earth or Maps?
Cars spinning donuts, side shows, count the burglar bars, gunfire most weekends…you don’t want to live there, even though it is relatively cheaper than the rest of the city.
San Francisco is doomed because of the kind of people running city government and several decades of sociologically suicidal political decisions, plus betting on the wrong kind of business horses.
You would be mistaken if you think buying real estate now is a good idea Falling knife comes to mind
Heard that on this blog for nearly a decade. Prices have done nothing but go up. The fed will keep the housing market propped up.
You will never find that until Proposition 13 is repealed.
Someone who has held a property for more than 10-15 years who has a low cost basis – their property tax is so much lower that they would be literally insane to sell.
Well they’re trying to change that game by making it easier and easier for people to retain their low property taxes even after moving. Recent propositions that passed come to mind.
Basically they just want to create yet another permanent divide between the haves and have-nots, in this case, a divide between high and low property tax rate payers.
I don’t know about other areas but in the Bay Area, I haven’t seen a huge price drop if you are just renting a bedroom within a house/flat. Last year, you can rent a room for between 1200 to 1900 depending on location, and if you to to Craigslist now, you won’t see a lot of changes if any.
Seems like it’s more profitable to subdivide a flat/house for rent than simply renting out the whole unit outright.
And many do especially in the ‘suburbs’ of San Francisco (Richmond and Sunset districts). Most homeowners do not follow city code or report the generated per room revenues. Lips are zipped with turned blind eyes.
If you wanted to see what happens here in Oz with house rentals to international students……………..
Was it maybe 4 or 5 years ago an excavation site next to a house or townhouse caused the other building to start to collapse.
IIRC there were something like 9 or 10 people living in that one townhouse – all students at Deakin University just up the road.
And then there are the townhouses by Monash University in Clayton where they will have even more people than that in one place. A three bedroom place with 15 people in it……………
A new, decent two-bedroom apartment in that university area will rent out for over A$2000 a month even now, but rents have fallen by about 10% and will fall even more as the block on students coming into Australia continues.
Lower end stuff probably isn’t going down much yet. I think Wolf is looking at mainly tower stats. Also, IDK, maybe people renting rooms will soon start renting flats together and then room rents will go down.
The data here is for rental apartment buildings (small with just a few units or towers), not single-family houses for rent. I report on those separately. That’s an entirely different market.
Why is that an entirely different market. Aren’t those two strongly correlated in the long run. People who rent would look at both of them and pick the better value of money. And BTW there isn’t much difference between SF SFH and Apartments. In fact Apartments often come with nice perks and are more walkable.
Kunal,
Yes normally, they’re correlated. But these aren’t normal times. People leave high-rises and move to single-family rentals so that they don’t have to use the elevators, and instead of paying $3,000 in rent for an apartment in the center they pay $2,500 in rent for a nice house in the suburbs. The whole market has split in a weird way.
I will get new data on SFH rentals in a week, but this is from November:
https://wolfstreet.com/2020/11/10/big-shifts-underway-rents-of-single-family-houses-rise-across-the-us-while-apartment-rents-in-expensive-cities-drop-sharply/
Darn, that’s why the Craigslist numbers are so high, (10,930), it includes houses and condos for rent.
Note to self: read entire article and all comments before posting.
It also includes rooms, and furnished temporary stuff, and stuff outside of San Francisco that was addressed to people looking in San Francisco, etc. It includes all kinds of other stuff. Craigslist is wild. Whatever the advertiser puts in it goes. No one is checking.
Idk if you saw this in local SF news but board of supervisors just approved an ordinance to collect rental information. In a city like SF, with a ton of money in housing/rentals, I think this will be so helpful
(Couldn’t find an article post-the approval but I know I saw them post on twitter that it passed)
https://www.sfexaminer.com/news/landlords-blast-proposal-to-require-annual-report-on-rentals-as-invasion-of-privacy/
Where I live workers drive 80 miles a day over a 12% grade, 8500 ft. pass to clean the bedpans of the ultra rich. The route is regularly swept by two major avalanche paths and runaway trucks just wiped out the multi-million dollar arresting system.
The rental vacancy level is about 1%, and rents are higher than most mid level cities. Being an entrepreneur, I thought I smelled opportunity. I can by any number of 20+ year old high-end motor homes that sold for $300,000 + for 20-30K.
They could be ready to occupy immediately, and are well suited to singles and young couples. They are self contained, twice the size of a “Tiny House”, and far nicer finished than the typical $450K “starter home.”
But not in this county! It’s illegal to park a motor home for more than 5 days unless it is being used temporarily while a trophy home is being built. The Horror! The neighbors might see it as they drive to the golf course—.
Is there really an organized plan to force everybody in the ex-middle class to live in a tent under a freeway overpass?
Ahh!.. FlopHaus 2.0 !
Good name for a private equity firm, wouldn’t you say?
/s
Would anyone have any idea what the sq. ft. difference is between a one bed and a two?
I haven’t compared in yrs but a while ago in a friend’s place it seemed not much. It was like they threw in 30 sq. ft. or about 7 % more, and charged 30% more for that, a wall and a door, cuz hey, there’s two of you.
This was not a high end building and I don’t know what is typical.
There are tiny two-bedroom apartments, and there are bigger ones. The classic two-bedroom in SF (older 2-3 story buildings) has a smaller bedroom for the kids, a larger bedroom for the parents, a living room, a full dining room, a big kitchen, and maybe a storage room near the back staircase. 1,400 square feet is quite common for those types of units. Some of them house 5 people though, these days. But there are also 850-sq-ft two-bedrooms out there in the new towers.
Apartments in SF tend to be larger than apartments in NYC.
A very small bedroom has about 100 square feet. So you can add that to a one-bedroom. Plus a second bath (maybe 40 sq. ft), which is now common in 2-BR apartments. So that would be a 850-square-foot 2-bedroom. We lived in one of those in Manhattan back in the day. Brand new, nicely done, big views, but cramped.
I heard recently an apt should have 600 sf per bedroom to be considered comfortable. In a big city that’s considered luxury. In a big city I would think it’s about 400 sf per bedroom.
400 SF = 20’x20′ BEDROOM
600 SF = 20’30’ BEDROOM
now if your talking total SF per UNIT
1 BR = 350-500 sq ft
2 BR = 500-800SF
My one bedroom is 900 SF but thats luxury for sure
Fort Lauderdale rents up 6.3%? Baloney. I live there and there’s been a tsunami of high end luxury rentals completed with another tidal wave under construction. They’re giving 2 months free on a 12 month lease and rents in Flagler Village and on Las Olas Blvd. are tanking. Where does this info. come from? It ain’t locals or the owners or lenders.
Paul Whalen,
This data is median asking rents, including new construction, of units advertised for rent in the Multiple Listing Services and other listing services. “Median” means half of the rents are higher and half are lower. Maybe the reason why they give “two months free” is so that they don’t have to lower the rent, no? Which is what I explained in the article.
Also, it seems you’re trying to apply your anecdotal observations to the market overall. That’s a trap.
Wolf:
I’ve been a commercial mortgage banker in Fort Lauderdale since 1980. I have transacted in excess of $800MM in multi-family rental sales and debt in this market. I’m well aware of the “effective rent shuffle” of free rents.
My client developers tell me face rents are dropping absolutely in the core market, irrespective of concessions. The average rents probably reflect the “revenge of the suburbs” in Western Broward County, but I’ll stand by my assertion about Fort Lauderdale rents.
PW,
Zumper does have its little survey quirks (15.6% changes – up *and* down – yoy seem to pop up with more than random frequency…)
But ApartmentList also has a survey, as does RentJungle…and RentJungle offers historical data back to 2011!
So crosschecks are available.
But my guess is that Zumper is at least approx correct most of the time.
Now if we can just get them to publish the stats on mkts 101 to 200.
How much are high rises on the ocean
Touche Mr Whalen!
Paul,
I live in Sunny Isles (not sure which rental market this is considered, as it’s basically halfway between Miami and Fort Lauderdale), in a rental, and I’m seeing the same as you. A lot of units in my building and the ones nearby available, and for higher rents than I’m paying, but they’ve been listed for a long time now.
I also don’t know whether the trend in the Northeast, from NYC to the suburbs, really applied here. Did some people move from apartments on Las Olas to single family homes in Weston and Cooper City? Maybe, but I doubt at nearly the rate of the large cities in the Northeast.
Paul m Whalen,
“My client developers tell me face rents are dropping absolutely in the core market, irrespective of concessions.”
I agree, developers are facing rents that are dropping from their aspirational rents that they were hoping to charge when they planned the building. In other words, they’re not getting what they hoped they might get. Rents are “dropping” from those hoped-for aspirational levels, that’s for sure, and I agree with you. But that’s a developer issue, not necessarily a market price issue.
That’s like a builder put a new ultra-luxury house on the market with a $50-million price tag. And two years later, it sells for $30 million. That doesn’t mean that market prices dropped 40%, but that the $50 million was an aspirational price. Yet, market prices might have gone up during that time.
PW, to paraphrase the author: “who are you going to believe, me or your own eyes?”.
R Bacon,
Nonsense. Whalen is a “commercial mortgage banker,” and is lending to developers that are building high-end apartment buildings. His clients, these developers, that are building these high-end apartments made all kinds of assumptions about rents a few years ago when they planned the buildings, did the permitting, lined up loans, etc. Their apartments are the latest and greatest and they were planning to charge high rents – that’s why they were building those high-end buildings in the first place. Those hopes of endlessly growing luxury rents might not have panned out, that’s the information Whalen is encountering and sharing here.
When these high-end apartments are put on the market with a high asking rent, though not as high a rent as hoped for, that fact alone will PUSH UP the “median asking rent” (the metric used in the article) for the entire market because of the change in mix (more high-end units).
So the first thing that happens when lots of high-end apartments are being marketed, even if none of them get filled with tenants, is that the median asking rent for the entire market ticks up. This is usually not a big issue because the number of new units coming on the market is small compared to the number of total units in the entire market. But those new high-end units will push up the median asking rent for the entire market. That’s just how it is.
Then there is the issue that the market might be strong in the lower half (older apartments), with lots of demand because they more likely fit people’s budgets, and rents might actually be increasing at the lower half, and this too drives up median asking rents. Whalen gets no info from his high-end apartment developer customers about the lower 80% of the market.
I love to see Tucson market going up
maybe some day they’ll reflect the massive prices investors are paying
I have 12 unit –
paid $850,000 2020
2 Bed casita’s-rents are maybe 650-700(and they say Tucson 1 Bed is $780???)
all I know is I’m 100% full and loving it
on 80 units
For years, journalists wrote that everyone wanted to live in dense cities. Nobody wanted to live in small towns or suburbs. Now we see that at the first chance people get, many will leave the city. The densely packed scenario seems to be an urban myth told by urban planners.
Dig deeper. Now the suburbs or rural area counties are in financial crisis plus the rate of Covid-19 hospitalizations & deaths. Rural hospitals are underfunded and understaffed.
These new city slick migrants are in awe of the suburban/rural tranquil settings yet will be in for a rude awakening in the context of their new county operations from county sheriffs to easement to community tribes to Wow, city slickers will truly get a taste of shopping at mega Wal-Mart!
I value this daily distribution so I know what’s going on elsewhere. That’s all one can say.
Last recession we had no sheriffs from 10PM till morning. Budget cuts. It was hell. I’m lucky, I just had to deal with the extra noise.
Your comment is funny. I lived in the 10th largest city in the US and I never was able to get the police to respond to noise complaints or automobile hit-and-runs. I also worked several years in NY where everybody knows don’t bother calling the cops. Earlier this year, there were riots and looting in NY and the police did nothing.
R Bacon I live in the wild west. Our very rural murder per capita rate is higher than LA. I hope you never have to realize what LEOs have deal with or what it means to not have them at all at night.
Not saying they’re not corrupt, but they do keep the violence down. A murder that involved mangling bodies and a beheading just happened south of us. It was a warning statement.
“a rude awakening”
Few awakenings are rougher than having to get up every day knowing you’ve got to grind out $3500 every month (post CA/NY tax) just to have a roof over your head.
The kleptopolis mindset (we have the best jobs so we’re going make you pay through the nose to live here…thereby appropriating a big chunk of your pay increment) built up a lot of ill will over the decades…so people have long been primed to depart…C19 is just the straw that broke the long suffering camel’s back.
Many small hospitals have been taken over by state / regional medical empires. I suspect they are loss leaders, since they send all the complex, high-invoice patients to the centralized hospitals with all the high-dollar doctors and fancy machines.
Locally, hospital workers were laid off during the spring wave because so many people cancelled appointments and “optional” procedures. Bean counters probably are relieved the census is up, although the thought of paying overtime to nurses will give them heartburn.
Of course receivables are not the same as cash on hand. Going from low census to overcapacity and filled with patients who may not pay must be tough on the cash flow. Good thing Uncle Fed is there to lend money at zero percent.
“city slickers will truly get a taste of shopping at mega Wal-Mart!”
Let me tell you, where I live the Walmart is a huge improvement over the previous department store, which was half-a-step (maybe) above Dollar General.
But then, farmers and forestry workers don’t have much use for the Mall of America…
Once man has conquered his basic needs (shelter, food) he seeks sex, and if that is conquered, he seeks social connection.
Expect cities to grow in the future, not shrink.
The only true counter to this idea is that internet / technology can connect. However, as long as humans remain flesh (which is admittedly not a given), people will seek in-person encounters.
Young adults will live at home till they get married. Or forever. Whichever comes first. Why fight it? Forced savings on them if need be will be my message to my own kids.
With adult-age children living longer at home now, we’re going to have to adopt one of Asia’s better ideas, short-term “love hotels.” Much more civilized than back-in-the-day dating in an old beet up jalopy on the cold, foggy nights.
H/Motels with hourly rates have been around in the ‘States for decades. You probably wouldn’t want to stay in one, though.
In small towns within 75 miles of Houston houses are selling to work from home buyers. Could many of the small towns across the country make a comeback ? Low taxes, low crime and low cost of living. Clean air , in some better schools than big cities. I’ve lived in foreign countries, big cities and on a ranch. Still like the cities but if I had school age kids and could work from home it would be small town Texas.
I lived in a small town in Texas for 25 years. My kids all grew up and went to school there. Now I live in a city along with every one of my seven children. None of them want to go back to small town life.
With those bargain rents, I am surprised the New Yorkers fleeing manhattan are not rushing in to Syracuse to do WFH and driving rents back up.
Lets note, the party on this is coming to a end as well. I see home sales sharply lower in 2021.
Only if the government let’s forebearsnce pass, the FHA loans come to deliquescy, and foreclosure actually occur. I am not holding my breath
Forebearance forever, “Homeowners” just leave the houses to the local government/teachers pension funds in their Will. They’re already getting the rest of it via the property tax bill.
Due to huge appreciation, most of the distressed homeowners likely have equity and will try to sell homes before foreclosure.
I’m surprised New Orleans made the top 20 in rents. We drove through there a couple of weeks ago and the city is dead. Almost everything is closed, probably 15% of the city is open.
We noticed the homeless living under the interstate were mostly gone. I asked a local if the homeless were being housed in hotels. He said no, they don’t get any help from the city and no handouts from tourist any more, so they left. Hard to see where the demand for rentals is coming from.
Large number have moved/squatting in Dallas and Houston due to the 4 hurricanes that landed in LA this year. Dallas was putting them up in hotels since many rooms are available.
If rents are down by 20% why isn’t reflecting on the price of apartment buildings, they are listing at all time high prices and there is very little inventory.
Please provide links or source. Which apartments are listed at all time high? Where? Little inventory of what? Condo? Apartments? SFH?
Based on this, the number of homes listed for sale is almost at 2 decades high. Remember back to Tech Bubble 1.0 Bust
http://socketsite.com/archives/2020/11/number-of-homes-on-the-market-in-san-francisco-drops-but.html
Same reason stocks are way above any reasonable valuation metric. Because a lot of people have cash to invest and don’t think assets can ever come down. This crates a self-fulfilling prophecy, until it crashes of course.
Memento mori,
Your statement is BS.
In San Francisco, where rents are down by 20%+, sales of apartment buildings have essentially frozen. In Q3, there were only $69 million in transactions, essentially nothing, and the only deals that were made involved buildings smaller than 20 units. Practically nothing is moving. Of those deals that were made, the average price collapsed to $240 per square foot, the lowest in many years, from the $600-$700 range in 2019.
Via Transwestern Market Reports.
Here is the data from San Francisco, everything is selling at all time high.
I don’t know where you get your info, but compass is a good source.
https://www.bayareamarketreports.com/trend/bay-area-apartment-building-market
You need to actually READ the charts that you link. Obviously, you have no clue what you linked. Obviously, you didn’t even look at it. And so you just made my point and contradicted your own statement.
1. The first two charts on prices are ANNUAL charts, with 2020 being YTD. Given that the market has frozen with very few transactions in Q2 and Q3, these are mostly deals that were made pre-covid.
2. There is no data on prices in these charts just for Q3.
3. Closed sales (3rd chart) in Q2 and Q3 collapsed to multi-year record lows.
4. Active listings (4th chart) are at record high.
5. Active listings at the end of September (5th chart) at record high.
These are the signs of a frozen market. No one can even figure out what prices are because there have been zero larger deals in Q3, only a few smaller buildings.
Wolf,
SF Examiner this week had an article talking about the fall in real estate transfer tax income.
According to the article, SF City had income of $335M in 2019 due to 7447 transactions.
From July 2019 to March 2020, each month had an average of 682 transfers and $33M in tax.
April, May and June saw the average fall to 482 and $12M.
YoY comparisons: 2019 to date saw 2977 transactions vs. 2774 in 2020, but transfer tax fell from $157M to $88M. And of the $88M, $41M was from 13 sales.
So the absolute numbers aren’t down so much overall, but the dollar value of sales is apparently way down.
SF City Assessor Carmen Chu notes that typically, 58% of transfer tax comes from properties worth $10M or more.
This reinforces both of your assertions: that multi-unit rental properties and high end properties are way down.
No deals. Rents dropping. People leaving. Deer in headlights syndrome.
Offer less. Way less.
Well, well. Crazy!. Rents in Portland are down 2% Lol… 7 months of craziness and rents there are down 2%… Lala land.
Also, anybody (if possible) should abstain from renting anywhere with the BS of 2 months free. DEMAND they lower the rent evenly spread on the 12 months. Ask and go with the one that does give you that. people need to get on the same plan. (those that can).
so you get 2 free months @ 3K per month, then a renewal you pay all 12 months a higher rent. You already know they won’t budget, the only option is to move. Moving sucks unless you’re a minimalist with few possessions.
Arizona prices are Redunkulous… it’s the friggin desert out there.
Anyway, I pray for the people who need to rent now, I hope they find decent shelter where they don’t have to surrender 60% of their income to all the psychopaths.
Can anybody from the Detroit area tell me why rents are up 18.8%?
Sounds like people are moving from more expensive areas to Detroit. Unless there’s gentrification going on there I’m not aware of.
Robert:
My brother lives in Detroit and he is currently WFH but his temporary home, at the moment, until January, is Florida!
Detroit rents being up makes no sense at all!
Check out Detroit downtown! Acquaintance — coder who’s been working from home forever — moved from San Francisco to Detroit before the Financial Crisis, paid $80,000 for a cool big loft and hasn’t looked back since. The area has been revitalized. Sort of a boom there. And other parts of the city are being pulled up too. If you can handle the winters…
My wife is from the Detroit area so I spend time there. What a disaster. Stay away from Detroit. They have a little area that has been revitalized surrounded by some of the largest and scariest areas on the face of the earth. Last time I was there, I went to the airport four hours early and waited for the plane … it was better than being in Detroit.
Landlords are not getting higher rents in Detroit. The median rent is higher because new luxury apartments have recently come on the market in downtown. Over the past few years many old abandoned office and hotel buildings were bought and being converted to luxury apartments. Almost every week, the Detroit Free Press would highlight these developments or some boomer couple who sold their Bloomfield Hills house and moved to these ghetto palaces. The higher median rent probably reflects the shift in mix, not widespread rent increases. One other point. This is most likely true because poor and working class people aren’t paying rent, and aren’t getting evicted, thus they aren’t moving and nobody will rent to them. Thus the number of transactions or offerings for the typical rental in Detroit is probably zero.
Thanks for the perspective. I haven’t visited the Detroit area recently, but my past experiences tell me there is a lot of hot air in the Detroit renewal story.
If you want a great book on the history of Detroit’s booms and busts (since the French!) read – “Detroit City is the Place to Be”, by Mark Binelli (a former resident of the area). Well written, and goes into some of the many intractable problems that development faces. Also the many media generated misconceptions about the place.
A satellite view of Detroit tells you the true story.
I guess I must be very unusual, but the moment the word “luxury” is applied to anything, I immediately lose all interest.
MM,
Thanks for the insight.
I appreciate Zumper for doing the heavy lifting (a valuable public service) but as I mentioned above the Z does occasionally cough up weird statistical anomalies. Your take may be the right one…survey methodologies are always key. Thankfully more and more websites are doing similar ntl rent surveys.
Could be an inverse statistic. Maybe people moving out of the more expensive apts to less expensive are leaving more expensive apartments empty and those are advertising. The stats are *asking* rents.
Detroit downtown has been booming for years and is pulling other parts of the city up behind it. Check it out.
I think the city tore down so many empty houses there isn’t much to gentrify anymore. I saw a drone video of the city last year and you could farm in most areas of the city.
The manufacturing plant I worked at 3 miles southwest of downtown Detroit in 1978 is gone….I mean really gone…just barren dirt for blocks. Where’s all the buildings?
Just in time for weed legalization.
Tegridy Farms, Detroit.
In Los Angeles 950K additional people expect household incomes to fall in December compared to September according to Bloomberg. LA seems to be sinking slowing into the Pacific Poor House…at least for the bottom 90%.
Also read that the primary/secondary spread, which measures the difference between where the lender can sell a home loan into the market and where they will offer one to a homeowner, sits at 1.55% this week. So with the trailing five-year average of 1.06%, perhaps another 0.49% of “housing stimulus” in the near future as demand for mortgages dries up if one can dream???? Kind of seems the low hanging housing fruit has been picked, pressed, and stored on the shelves of the wealthy to be enjoyed over the long dark winter. But hey, I hear vans are nice for everyone else (sarcasm)…
“vans are nice”
Down by the (LA) river. Ew.
(Hat tip – Chris Farley).
Thanks for the update Wolf. This is all crazy sauce!
So many variables at play, hard to decipher when all of this will play out. And when pensions begin to get hit, it’s gonna start all over again.
History in the making! Keep moving, folks, nothin’ to see here…
Wolf, Wolf, Wolf…does housing really matter once we all work for Amazon, delivering packages to ourselves? As we reach the ultimate utopia of existence, housing will be free for all as we all will be living in our Amazon supplied delivery vans! Simply wait for further instructions via an upcominig Alexa nanoparticle mind control vaccine…HA
“Zillow lists 3,735 rentals in the City at the moment.”
Amateur hour! Craigslist has10,939 rentals listed as of a few minutes ago.
“Craigslist San Francisco /Select ‘All neighborhoods’/zoom out to mapview of S.F. only, or, look at showing “X of 10,939”.
Revenge is sweet. All you folks priced out of the city, no matter where you are, you can flag the outrageous expensive listings and help hammer them down to a reasonable level.
tony22,
The key point: compared to prior years. Craigslist contains all kinds of stuff. So what was the number two or three years ago? That’s would be the data point that matters, and that’s what I pointed out – that the Zillow listings tripled from a few years ago. You quoted this line out of context. This is what the whole thing said:
“Zillow lists 3,735 rentals in the City at the moment. That’s more than double the 1,851 listings in May 2018 and more than triple the 1,149 listings in August 2016.”
Doesn’t Craigslist have a ton of repeat listings? Every time I browse I see the same unit repeated, often once a day. Or do they have a method of eliminating dups?
I am seeing apartments sitting vacant while rental houses in the same area are in high demand. Once the COVID vaccine is distributed, I expect this to reverse.
And as soon as this fad of dirty, smelly, new-fangled auto-mobiles wears off we will return to horses.
Love him or loathe him, Socaljim is right more often than he is wrong. I believe him before I believe you.
“return to horses”
Local Amish communities are expanding rapidly (they have large families) so yes, there are now more horse buggies than seen for many decades.
All the time I see what’s old is new again, like growing a garden (recall WWII victory gardens), work from home (almost everybody did before textile factories), living in tarpaper shacks, soup lines, etc.
Probably won’t see Bank Holidays again. The Fed’s press will stop that.
“we will return to horses”
Given the state of things…you mean for, like, eating?
“we will return to horses”
Given the state of things…you mean for, like, eating?
Umm, basashi – yum…………..
basashi = Japanese for raw horse meat often found in Nagano Prefecture eating establishments.
Try it, you may like it!!
SF had a decade of rampant condo construction all over the city. A condo glut was reported back in 2016 (SFBT) and there have been shortages on construction labor/equipment. So, I don’t understand how much more building could have been done. All the while, rents shot up to the moon!
Of course, SF is desirable and the tech boom (bubble) fueled the speculation (remember that word?). But the purist supply/demand argument that blames “Nimbys” and claims the problem “goes back to the 70’s” is ludicrous (personally, I blame the Ohlone for not “building enough”).
Building luxury condos and allowing the 1% to treat housing as investment vehicles (Airbnb, etc) bumps up the “market rate” and leaves no room for normal working class people. You can’t just say “build build build”. There are limits to urban growth for any given area. Housing policy should be designed for actual human beings, not capital.
In Newport Beach, some people are wondering what the future holds. I know quite a few people who have very very expensive cars … Ferrari and Bentley stuff. Now, they are hidden away in the garage and the owners are scared to drive them. Once they get slightly out of Newport with their expensive rides, they experience people cutting them off as well as verbal threats. Kind of a class warfare thing that makes them feel uncomfortable living here. I drive cars at the cheaper end of the spectrum, so I never had this happen. Anyway, if this behavior continues, the wealthy will start leaving SoCal high end beach cities and that could reverse the strong housing and rental market. Keeping my fingers crossed that this does not happen …. I would take a big financial hit. A little worried …
Sounds like your Bentley Farrari friends have never driven in pre Covid Boston where you get cut off and yelled weather you drive a 20 yr Ford or brand new Bentley. You might suggest to your Bentley friends they get out of their bubble and miggle with The Peasants.
If Beverly Hills can afford to have their own police force, can’t see why the people at Newport Beach can’t afford one.
But…..we are defunding the police now. Maybe call them “traffic enforcement”?
That is just the normal LA feeling, isn’t it? Always feels like there could be a riot or something triggered by a hair falling.
How can they riot? They have been ordered to shelter in place…only the homeless are except…and of course the political elite.
Wool should be at an all time low.
It sounds like any given day driving through LA. Maybe they could just stop going that far? The finger for no apparent reason. Rage-honk for daring to wait 1/10th of a second after the light turns green. LA takes the cake for America’s Most “Unpleasant” Drivers.
I see that the biggest % drop from record for a one-bedroom place is held by Honolulu with a 29.6% drop.
That is a huge change in rent and now stands at US$1500 for a one bedroom.
I know these are for apartments and not conods which make up the largest portion of rental ‘units’ on the island, but wow.
With that kind of money being taken in for rent the monthly fees charged by the HOA for most condos will take up a bunch of that.
Add in and tax on short term rents (15% IIRC) if you have any given the current situation, and carrying costs are huge comapred to income………
Honolulu’s tourist economy has taken a massive Covid hit (that long, long flight) …close to 17% of all jobs have been lost, yr over yr.
https://www.deptofnumbers.com/employment/hawaii/urban-honolulu/
IIRC the military/defence in Oahu now accounts for about 20% or more of Hawai’i GDP and a huge number of jobs.
It is the only thing keeping the economy there afloat given the current situation.
I own rental apartments in a big market. Let me tell you something- rental apartments are the best investments you could ever make adjusting for risk. This downturn is just a slump and occupancies and rents will recover starting in the spring. Rental income is steady income. It’s not some fictional tech disrupting story book fantasy cooked up by Wall Street to pawn off to the retail public. It’s INCOME and everyone needs it. So if my profit dips 20% this year it’s still profit and it will bounce back. People always need a comfortable and safe place to live and cities will return with a thundering vengeance when every business is actually allowed to do business again. People are dying for a return to normalcy. Work from home, home from work, I don’t care. People need a place to live and urban living has tremendous appeal, particularly for the younger generation. Cities are an organic agglomeration of thoughts, idea, touches, smells, energy and excitement. Cities are visual cornucopias. People meet online and then meet up. There is a tangible vaccum of physical connections now in everything from high intensity work meetings to hugging your grandkids to frat parties. And don’t forget the hook ups! No video conference can ever replace that feeling.
2 provisos to my aforementioned comments- debt & price point.
First, the hazards of too much debt. Obviously debt can wipe you out and if you have a giant mortgage to service you can easily get crushed. I acquire new properties using high leverage but never refinance and carry very low leverage in my portfolio. I can weather the storm and do so primarily by dropping my rents to meet the market. If I was getting $1500 and the market rent is now $1200, I’ll take it. The Boy Who Cried Wolf can yammer on about the crash, I don’t care. It’s not my whole building that’s turning over, it’s just the most expensive units. I don’t want empty units. It’s lost income. I don’t need to fool the bank or my investors into thinking that $1500 is coming back tomorrow. This is a CASH FLOW business.
Second, the price point. I don’t buildings where every month I must rent at the absolute highest price point in the market to manufacture some fantasy IRR that I promised to the moron investors. I don’t invest in flashing apartments like the one that Wolf profiled in Lower Manhattan the other day. That’s more like hotel than an apartment. Renters there have the buying power to live basically anywhere and when the alarms sounded they all left. Or maybe they never came as it’s a relatively new building. That said that building is a beauty and it should rent back up very quickly when water eventually finds it’s level but it could be a major hit for the owners.
I rent quality units at slightly below market rents. They know they’re getting a deal and they don’t feel cheated. They end staying longer and can absorb smaller increases over time instead of thinking they got ripped off DAY 1. As a corollary to that point, I try to only invest in markets where the single family housing stock in the immediate area is super posh. Areas where service people, staff, hard working people want to enjoy the same local amenities as the multi millionaire homeowners that surround them.
As a landlord I feel that the news of my death has been greatly exaggerated. I am wounded but on the mend. Life will continue. I will keep generating profits and distributing income to my partners and investors that far exceed the interest they get on any savings. And their assets aren’t going anywhere.
Can you say that for your Tesla shares? Or Uber? Or any of these crazy tech companies with no profits in sight? Fortunes have been made in that space it’s true but where are the profits?
I’ve often wondered about the very tight apt supply, pre Covid.
Given the insanely low ZIRP’ed returns for fixed income invts…and the soaring apt rents…given stagnant median incomes…I was always surprised that a lot *more* apt supply didn’t come on the mkt (again, pre Covid).
There was a supply bump, but nothing like what was needed (witness soaring rents)…I was long curious about that…you would have thought that ZIRP’ed bond investors would have looked into building apartment complexes.
Perhaps the banks, heavily burned by 2009, kept a really tight lease on financing…but RE crowdfunding is a thing…
Also, it seems that new apt construction financing is oddly weighted towards the Fannie/Freddie’s of the world…never really understood that also…apt construction financing seems like a paradigmatic commercial bank thing to do.
Any experts on apt construction financing on the board?