Availability and Rental Rates Increase

All listings by room configuration plotted independently.

All listings by room configuration plotted independently.

Average rental rates continue to climb at pretty much the same rate as they have since 2011. The market appears to be willing to pay more at a time when the availability of apartments is increasing. Now, remember these are asking prices as listed by Craigslist.org. The actual price paid may be less. There must be some living spaces that are rented without any advertising. Please remember if you would like to use these graphs please get the written approval from both Craigslist.org and Missionlocal.org.

Average rental rates plotted by room configuration.

Average rental rates plotted by room configuration.

As you can see, the rental rates continue to rise.  Plots for the larger number of rooms have a great deal of variability as the sample size is small.  The rental rates began to climb just after the financial meltdown in 2009. The demand was low and unfortunately there was no building of any kind in the city. The 2009 construction stall is one of the key dynamics, which I believe brought us today’s housing shortage. 

All apartments available stacked by room configuration.

All apartments available stacked by room configuration.

There was an abundance of available apartments in 2009. The nation and San Francisco’s economy was at a stand still and financing was impossible. Gradually the economy picked up and people began returning to the city, resulting in a decline in availability until the middle of 2011. The meager availability continued until some of the new construction has begun to come online. From that point on to today availability of apartments on Craigslist.org are increasing.

All apartments listed clustered by room configuration and rate.

All apartments listed clustered by room configuration and rate.

As you know this is my favorite graph.  It lists every individual apartment available at sample time for the past couple years. The distribution of asking rents is shown.  The “clumps” of dots indicate the bedroom configuration. The first group plots studios. Then one-bedroom listings are plotted and so on.

I’m guessing that when availability hits some yet unknown spot we will see a bifurcation of rate clusters.  One being those apartments that are new and reflect current building and financing costs and all the rest.  The new construction economics are most probably based on rental income projected to reflect the current level and excellent occupancy rates.

The banks are relying on the developers generating that kind of a revenue stream. The other properties are influenced by code compliance like AB094 and the general higher cost of maintenance of older buildings. Now for your part. What do you see? How about the future? All decent remarks are encouraged.

Remember, Mission Local’s commentary policy requests that you limit your comments and counter-comments. We want to avoid “ping-pong” commentary that has a tendency to bury great thoughts in a rhetorical discussion. All of the comments in this posting and my colorful charts are a reflection of my personal thoughts and in no way reflect the thinking of Craigslist.org or the editorial position of Mission Local. It’s just me, a self-assigned number fiend, thinking.

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51 Comments

  1. John

    How could rents ever be low and availability high when over 50% of tenants feel that they have a vested interest in hoarding their units for decades to take advantage of a bizarre policy that rewards inertia and punishes progress?

    • Russo

      JJ’s psychic powers are truly cosmic. Imagine! He peers into the minds of tenants and intuits that they are actually…filthy HOARDERS! And all long I thought they were normal working people with a vested interest in their families and their communities.

      I’m starting to see the light about poor people now. Just a few days ago, JJ revealed to us all that “folks who shop at thrift stores are happy to go to less desirable locations” when the nice Goodwill is razed. He just KNOWS what makes them happy! No need for fancy graphs and studies for him.

      • marcos

        To “John” and the boosters, existing San Franciscans are just not “vibrant” enough.

  2. marcos

    Theoclassical economics commands that we must sacrifice more and more of our City on the altar of the free market by entitling ever more luxury condo towers.

    When we realize that does not work, then it is time to lard up the pyres with landlords who whine about rent control.

    • marcos

      Yet housing prices continue their skyward spiral even as more housing production was supposed to arrest the increase or, hah, induce a decline in prices.

      Must. Sacrifice. More. Of. San Francisco. To. The. Gods. Of. The. Most. Holy. Market.

      • two beers

        “Who said condos get built to lower home prices?”

        All opposition to building luxury loft behemoths is met with attacks from the banker/builder/realtor/landlord cartel that these projects must be rammed through to help mitigate the middle class housing crisis in SF.

        When, in fact, as marcos notes, and recent events show, building only housing that is unaffordable to the middle class makes all housing more unaffordable.

      • two beers

        Thanks for intentionally misconstruing my argument. You always do!

        I didn’t say anyone builds because _they_ think it will lower prices.

        I said that the developer bloc uses that argument against neighborhood opposition. You know, the incessant cries of “NIMBY! NIMBY!”, that follow whenever someone questions the wisdom of building more luxury lofts.

        As soon as there is opposition to your theoretical intention to build 20 luxury lofts on your property, you will scream that the opposition to your plans is causing housing to be unaffordable. “NIMBY!”

      • marcos

        These buildings get up zoned and entitled because developers purchase local government and use their Wall Street piggy banks to attack anyone who contests this.

      • marcos

        Just build it, we need more housing, NIMBY!

        Either we entitle developers’ wet dreams or we oppose all housing everywhere all of the time because we don’t care about making housing more expensive by building more homes.

      • two beers

        John, neither marcos nor I said “never build.”

        Can you get through even one post without lying?

        You prove over and over that you have no interest in having a discussion.

        Your only interest seems to be in hijacking threads you perceive as threatening to your income stream.

      • two beers

        marcos – John has a simplistic Manichean viewpoint. Black and white, either/or. There is no middle ground.

        You either give in to all his demands, and agree with his rightwing worldview, or you’re Joseph Stalin.

      • marcos

        Political communication does not follow the rules of normal discourse, there is no fact checking. A practiced by “John,” political communication occurs along the Fox [sic] News model, simply repeating the same lies over and again, downshifting to the next “argument” when cornered, lather rinse repeat.

        So long as non-neoliberals labor under the misapprehension that we can use debating class skills to “defeat” neoliberalism, we will continue to move towards extinction.

        All that counts is making political appeals that bring people over to our way whether they are forensically defensible in a structured debate or not.

      • marcos

        It means fucking your day with Prop B last November and with another Prop B again this June. The days of developer dominance of land use policy are coming to an end, that is why they’re trying to rush their crap projects through the approvals process before the backlash commences in earnest.

      • two beers

        Strawman John strikes again.

        marcos- the objective of propaganda is not to try to honestly convince others through logic, data, and sound reasoning.

        The objective of propaganda is to obliterate the opposition voice, Propaganda seeks to dominate the discourse through a variety of sleazy techniques, many of which John deploys here on a daily basis, such as insults, lying, wild exaggerations, misrepresentations, strawmen, etc.

        O keep making the mistake of trying to engage him in good faith. It’s a sucker’s bet, because all he is is a propagandist.

      • marcos

        Which is why my responses to him rarely comprise more than a tweetfful of bytes.

      • two beers

        “I” keep making…

      • two beers

        I know, marcos. I have better things to do than waste my time trying to engage intellectually with the equivalent of a monkey in a zoo flinging his poo at the wall, trying to see what sticks.

      • marcos

        Backlash.

      • marcos

        The people spoke and they voted last year for Prop B, they are speaking now and they are voting now for Prop B to the extent that those who “won” election with 18% of the popular vote are sidelined and not opposing Prop B. Pwned.

      • marcos

        Developers are fortunate to have opponents most of whom are ‘elfin retards.

      • marcos

        The ‘effin retards are the poverty non profiteers who cut crap deals with developers to up zone.

  3. Backtotheburbs

    Your favorite plot has no axis, color or group labels? And what’s a ‘clump’ anyway?

    It would be meaningful to separate the data based on construction date. Anecdotally everyone knows that new places are smaller and more expensive, which is the exact reason why the current building trends are counterproductive regarding the housing crisis.

    • backtotheburbs

      There is no logic in your argument. Plenty of historical housing or more recent but in locations etc. fetch high prices.

      And while new housing should be marginally more expensive due to inflation and cost of living and land increases, 1M$ 1BR or studios in high rises is preposterous and indicative of speculation.

      Do you have data on developer profits in SF? That would be relevant here but as usual you are not citing data. I know that for recent development on Valencia the lot was bought of 1.6M$ just a few years ago, and now that is close to the average price of a single unit.

      Also how about breaking down the data for cost of development? What makes SF so special? Do materials really cost that much more? Contractors? It clear that the cost is due to developer profits …

      • two beers

        Of course contractors are expensive here.

        They can’t afford to rent space here for their offices, warehouses, and workshops.

        And they have to pay their workers more to commute from Manteca, because the workers can’t afford to live in the luxury lofts that constitute most new build.

      • two beers

        wtf?

        itt seems you’ve given up, and are now juist tossing out random landflord word salad.

      • marcos

        Didn’t Henry Ford, arch-capitalist, figure this one out more than a century ago?

      • Backtotheburbs

        Yes, it’s expensive here – but also In many other major cities around the world. I don’t think anyone believes that the new developments are not generating profits. The precise question is what are those profit margins?

        Even if a team of 20 contractors making 100K for a year work on a development, that is just 2M$, so maybe the price of two units max and this estimate is very generous. An average new building has 20 or more units. The Valencia street example I gave had a land value of 1.6M circa a few years ago, again the average price of a unit there, and nowhere near the ‘half cost’ you cite. With larger buildings economy of scale is at work bringing development costs lower and profits higher,

        And BTW none of these new luxury developments are built in challenging locations e.g. slopes. They are built on prime SF sites that tend to be flat and earthquake safe.

        Based on single home flipping the profit margins seem to be in the 50-100% range.

        Again, we are watching a city ravaged by a speculative wave that will leave SF looking like Miami at many levels.

      • two beers

        Genius, rent isn’t vacancy control, and it doesn’t apply ot new units. So how is rent control supposed to keep rents on new and vacant units down? Rent control has strict limitations, or are you ignorant of this fact?

        If you’re saying that rent control is a weak law, and needs to be strengthened with vacancy control, and be applied to all units regardless of age, I won’t argue with you,

        You heard it here first: John the landlord admits that rent control doesn’t go far enough!

      • two beers

        Yes, John, I’m glad you agree that rent control only keeps the rent of the existing unit down. I also agree with you that to solve this problem, rent control needs to be strengthened.

        I’m glad to know we can count on your support for implementing vacancy control! Also, I’m glad you support applying rent control to all rentals, not just those older than thirty-four years.

        I have to applaud you on your logic. Well done, sir!

      • Backtotheburbs

        Of course it’s not about what other people make and spinning this as envy is just vain. But when the average city employee In a world class city at the height of an economic boom, with plenty of intellect and experience around, cannot afford to RENT in that city … something is very wrong. And that is just one example, plenty of other needed professions also dont provide a living here anymore.

        So again, I ask what are the profit margins on these new developments? This is housing we are speaking of, not some useless luxury.

        If someone started charging 10 or 100x for food staples, gas, electricity etc. there would be a crackdown or revolt. The Fed subsidizes some of these items for that very reason on top of many regulartory controls.

        People should demand that the city oversee building costs, the voters have a right to know.

  4. two beers

    Interesting charts, George. This warrants further study and discussion.

    Prepare to be attacked for posting charts that show inconsistent implementation of one of the unassailable shibboleths of neo-classical economics.

    Prepare to have the discourse hijacked by those threatened by any evidence that their agenda is built on poorly-examined theories.

    • two beers

      Actually, they do. They show that rents kept going up as supply increased. Or you can say that supply went up as rents increased. I agree that the charts don’t prove causation, but they do indicate an association.

      It seems that discussion of this association make some people nervous.

      • two beers

        Yes, there are many reasons why cost of housing go up. It makes sense to analyze what they are.

        it may well be that a luxury loft building boom is causing all housing to become more unaffordable. But whenever this possibility is raised, the banker./developer/realtor/landlord contingent start screaming that impeding the building of luxury lofts will cause housing to become more unaffordable.

        You guys aren’t even willing to have a discussion about this.

      • two beers

        John, you should just stop pretending that you have any interest in a discussion of cause and effect, and are just concerned with hijacking threads, hurling insults, wildly misrepresenting what others say, and doing whatever else is necessary to commandeer the discourse away from certain topics.

      • marcos

        This is a propaganda technique designed to deflect attention from the issue at hand that is painful for “John’s” case.

      • marcos

        Your comments are worthy of contempt.

  5. Bob

    Interesting data. Building more market rate housing in the Mission is the only way to bring down rents for everyone.

  6. George

    Sorry for the confusion about my favorite graph. If you click on the graph’s image the full graph will display. The ordinate axis is asking monthly rent. The “clumps” are how the individual listings are grouped. The first clump displays all of the studios ordered by asking price. the second clump is one bedroom etc. The objective is to display all the apartments offered in two perspectives. First by how the listings define the average in the previous chard. Second, in some sort of historical perspective as the smaller dots are color coded by data set and represent all apartments listed over the past three plus years. …and yes my middle name is confusion. have fun!

    • George Lipp Post author

      Great thoughts, Unfortunately CL is the only public information that is consistent as a source. So that is really all I can track. What I do is go through all the postings and cull room for rent and duplications of which there are many. Finally, some of the asking rents are amazing. That is why I like all the little dots, One can see the components of the average. Take care.

  7. Tom T.

    George, interesting last graph. Two questions though: If the “clumps” represent bedroom configuration, please explain what the increments on your abscissa coordinate represent? Also please explain how you are utilizing color coding. As creatures whose main strength is pattern recognition, in the absence of further descriptions regarding these points, we’ll tend to make our own ungrounded assumptions about these sets of scatter plots that keep trending up.

    At first glance this graph, though, while there are obvious outliers in the asking prices, it does seem to show strong clusters that follow very closely along trendlines. This would suggest these tight central clusters follow the amount that buyers are actually willing to pay in the market, which is more logical than the idea of the trendline representing either an inflated rate or “teaser” rate (the latter to to spark the rate negotiations mentioned earlier by John). Both of these would be more likely to be determined by individual landlords, and thus be better represented by the outliers in the graph. So I for one see the trendline as a “willingness to pay” trendline.

    I can’t wait to see the bifurcation that you mentioned stratifying the rental market. Theoretically, as more spiffy new apartments are built, those who can afford them will choose these units (and pay premium $ for them) over not-so-nice units. With this emerging competition for top dollar renters, current rental units, which aren’t quite as nice and/or new (because the landlord can’t or won’t improve the property) will have to adjust their rates. As a result, a different market of renters will be accommodated. And so on down to the “beater” units, who will have to adjust rates still lower, until an equilibrium is reached with multiple rental markets.

    As new construction continues (and yes, it will continue), stratification in your graph (or lack thereof) will either prove or disprove this.

    • George Lipp Post author

      Great questions Tom. Thank you. The abscissa increments are puzzling. Here is what I did and the logic therein. The data has several elements; the rental rate, the date listed, the description, number of rooms. I first review each listing and remove any multiple listings, of which there are always many. I also exclude single rooms sub-leased in a larger apartment. These data are then sorted first by number of rooms, and then by rental rate, finally by date listed. At that point the listing are ordered from the fewest bedrooms and lowest cost to the apartment with the largest number of rooms with the highest asking price. That is what is shown in the “clumps” graph. The abscissa is strictly sequential. I look at the breadth of the plots along the x-axis as an indication of availability by room configuration while the distribution along the y-axis gives me a feel for the range of prices asked. The slope of the obviously combines both. All the smaller plots are previous samplings. The color-coding falls apart as the number of samples, over time, has exceeded the colors available. The samples from 2009 were broad and the slope of the plots was rather flat. I concluded that there were lots of apartments listed and the asking price was fairly consistent. Later plots the slope was steep and the breadth was narrow… not many apartments and a great deal of variation lowest price to highest. What I am looking for now is some form of multimodal distribution indicating at the high end rental rates driven by construction economics and at the lower end by the need for occupancy. As an interesting side note, over the years I have noticed (anecdotal) all apartments, even the real old ones have significant renovation. That is the stuff an owner can access has been improved, wiring and water are another question.

      • John

        You and Tom will make a lovely couple.

        • two beers

          Statistics are scawy!

          Especially when they disprove cherished shibboleths.

          • John

            I was parodying their nerdiness rather than their content.

            but that said, what do their stats tell you, other than that SF is expensive, which I kinda figure we all knew anyway?

  8. ThatGuy

    I’m just here for the comments as they’re just that.

  9. Deke

    I kinda lost some of the argument here just because there was so much back and forth but I want to throw something out there to see what people think…
    I do okay financially but my rent is crazy for a 1B.

    THAT makes it really hard for me to save money for a deposit and fees to buy a place. I mean even with a first home buyer loan you need around $40k which is a lot of money. There are “programs” to help people buy apartments in SF but they seem to be always aimed at specific professions (e.g. teachers) and income levels that I always seem to be slightly above.

    Forget what you think of the tech people for a second, I guess most earn 6 figures right?… in my opinion someone on a 6 figure salary should be an owner, not a renter. Having this income level in the rental market is part of what is causing this spike. Someone on that kind of salary should be looking to buy a place, not rent but the reality is, it’s really hard to get a loan without a sizable deposit.

    If there were some way to make these programs to help people buy more “mainstream” then you’d see more demand for buying and less demand for renting and rents would stabilize.

    When I was in my 20′s I was able to take advantage of a first home owner scheme in another country and I was able to buy my own house (which I since sold and spent the tiny profit moving to the US).

    Now before someone jumps up my butt, I recognize there are supply issues that affect this theory and other such things… but as a general observation, I feel like it’s VERY hard to actually buy a place here and the programs that help only target the lower incomes and people on middle incomes don’t get a lot of help and I know it’s hard to feel empathy for someone who earns 100k but it’s not about empathy, it’s about helping the entire community.

    I know some of you will think I’m naive (it seems there’s always going to a contrarian on this site), but I think the bottom line is that too many people rent, more people should be buying and we need to find ways to make that happen. I’d be interested to see if anyone has other ideas on how to get more people to buy and less to rent?

  10. The segregated two tier rent control scam in SF needs to be ended. Why should some get price controls and everyone else faces market rents that are much higher, because lots of apartments that are price controlled, are kept off the market by unjustly enriched hoarders.

    • John

      Yes, Kevin, it surprises me that tenant activists do not seem at all concerned about the disparity and randomness of the city’s housing policies..

      But then most of them are middle-aged white liberals who already have their own sweet RC deal or bought a condo years ago with all the money they saved on rent.

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