More evidence shows that astronomical rental prices in San Francisco are falling closer and closer to the ground.
According to a September rental report from the Realtor.com classifieds website, rental prices in San Francisco have seen the country’s biggest declines from the previous year in all three categories: studio, one-bedroom and two-bedroom.
Changes in remote work policies during the coronavirus pandemic have driven a downward trend in rents in expensive urban areas across the country, especially in heavy rental markets such as the Bay Area.
“What we’re seeing is a real shift from high costs, especially in urban centers, to the suburbs and to accessibility,” said George Ratiu, a senior economist at Realtor.com. “A large number of companies, and San Francisco is a leader in this, are aware of the enormous burden, and technology companies are among the first to announce expanded remote work policies for next year.”
Workers were able to move out of high-priced rents close to their jobs in San Francisco and Silicon Valley and in more affordable rentals or larger properties in quieter neighborhoods and with amenities like a home office or home gym. Ratiu I said.
Average rental prices for studio apartments in San Francisco fell 31% year-on-year to $ 2,285 in September, according to Realtor.com. The average price fell 24.2% to $ 2,873 for one-bedroom apartments and fell 21.3% to $ 3,931 for two-bedroom apartments. Apartment List and Zumper recently published similar findings in their September rental reports.
Adjacent to San Francisco were the counties of San Mateo and Santa Clara, both in the top four for the three dropout categories. Santa Clara has the third largest drop nationally in studio apartment rental prices, by 19.2%, and San Mateo is fourth, with 17.6%. Alameda also entered the list, ranking 10th with a 12.1% reduction in studio rental prices.
For one-bedroom apartments, San Mateo was second on the list of steepest declines, with rents falling 12.5 percent. Santa Clara ranked third with a 12% drop. San Mateo and Santa Clara decreased by 11.1% and 9.2% respectively in the average rent of two bedrooms.
For national comparison, Realtor.com found that in the 100 largest counties in the United States, the average studio rent was $ 1,347, down 0.5 percent year-over-year; the median for single beds was $ 1,502, up 1%; and the average rent for a two-bedroom unit is $ 1,873, an increase of 2.3%.
Ratiu said it was not surprising to see strong migration to accessibility in San Francisco and Silicon Valley, where before the pandemic many people were willing to pay a premium to live close to their jobs. He said at least next year that he expects the softening of the rental market in San Francisco to continue, especially after employers see the positive side of telecommuting.
“We’ve seen a lot more companies … start to realize that remote work has now turned out to be a very viable business proposition,” he said. “Companies also realize that it’s hard for many employees to make ends meet … so they take advantage of the geographical dispersion and set up offices in lower-cost areas.”
Ratiu said he believes many companies will adopt a hybrid approach in which office workers will spend part of their time in the office and the other part working remotely.
For its rental report, Realtor.com explores units, including residential communities and private rents, such as apartments, townhouses and single-family homes. National rents are calculated from the average rents for the 100 largest U.S. counties, with the exception of studios, which are based in 80 of the counties with at least 20 listings.
Realtor.com is operated by Move Inc., a subsidiary of News Corp., under license from the National Brokers Association.
Kelly Hwang is a writer for the San Francisco Chronicle staff. Email: firstname.lastname@example.org Twitter: @KellieHwang