We already know this, but it does seem to be getting kind of outlandish. I was in Manhattan and met up with a friend moving back there. She found a three-bedroom in Harlem for $3800 a month. That might get you a two-bedroom here, but most likely a roomy one-bedroom.
The San Francisco Chronicle tells us just how bad it is.
The slight slump is a typical seasonal slowdown. After a year of rocket-like gains, asking rents remain sky-high compared with just a year ago.
“It’s still a brutal market out there for prospective renters,” said Craig Berendt, principal of Berendt Properties, which serves as leasing agent for several hundred rentals a year. “Things are very cyclical and start to taper off at the end of the year. It takes longer to get places rented because not as many (prospective) tenants are looking. The rental market is driven by hiring, and companies don’t hire as much in the winter. But landlords are still getting extremely, ridiculously high rents.”
Lovely, which runs the www.LiveLovely.com website, showed the median San Francisco asking rent price as $3,256 in the fourth quarter, down 3 percent from the preceding three months – but still up 15 percent from a year earlier. Read the full story here.
Oakland recently passed RC and EC? EC is against state law I believe. Also, I thought both Oakland and berkeley relaxed RC in recent years. Do u have more deets?
Eviction control isn’t against State law. SF has it in the form of the 15 just causes needed to evict.
Berkeley has something similar.
Oakland was interesting because it had rent control but not eviction control. The voters there passed a prop a few years back that added the just cause eviction protection. It is still weaker than SF’s however.
Berkeley exempts small buildings from rent control which SF does not.
Were you thinking of vacancy control? That’s illegal under State law. SF never had it anyway, but Berkeley did, along with Santa Monica.
Yeah it was VC.
So what’s the basic diff between Oakland and SF RC now? Are 2-4 units under RC? I assume SFH and condos are not (again, believe that’s under state law.)
I’m not an expert on their systems but Berkeley has an important exemption for 2-4 unit buildings where the owner lives there. SF got rid of that in 1994 which, to many peoples’ minds, was the start of the bad times for LL-TT relationships. Prior to that it was mainly big corporate LL’s who were affected.
Oakland allows bigger raises and has weaker eviction protection. Also, because their RC was very ineffective until very recently, you do not have the SF situation with some loser who has been there for 40 years paying almost nothing for a 3BR in Nob Hill.
Of course, outside of those 3 cities, there is no RC in the Bay Area AFAIK.
Ok, that’s pretty much what I know. And yes, prop I back in ’94 started the real regression. Of course 94 rents are twenty years ago, so some of those long term renters chickens are coming home to roost, in the form of Ellis evictions.
I’ve contemplated investing in Oakland every bull market, but later end up not regretting the decision to pass. Maybe this time it’s different? But I’d still put my appreciation speculation on bayview or excelsior before west Oakland. There is just a much bad areas around there, and who wants to schlep the bridge to deal with tenants? I’m in the position of not having to do so. It’s nice not having to maximize every investment dollar.
How do you feel about bayview and excelsior? Or the rest of D10 for that matter? That, and boring outer sunset are the last affordable bastions of SF for investors. If this cycle has legs, this could be custards last stand for awhile…
It’s not that bad over here in Oakland.
Yes, as I noted earlier, Oakland rents (and so presumably other housing costs) are about half of SF.
For a place just minutes away from SF by car or train, that’s a very tempting location for those who find themselves struggling with housing costs in SF, in much the same way as people in Manhattan often move to the boroughs or New Jersey.
John, you investing in Oakland? Just curious.
No, but I did take a serious look about 2-3 years ago, at the bottom of the last market cycle. There were some very cheap rental properties there at the time, especially as Oakland has recently passed some form of rent and eviction control, depressing prices. (Although their form of rent control is easily bypassed).
I’d was looking at GRM’s of 10 and below, at the time, which now would be giving my 15% annual running yields.
But i played it safe and bought another SF building. It’s done well, of course, but the ROI’s have not met was available in the more bombed out places.
Actual research is showing that gentrification DECREASES displacement if long time residents.
Mission Local, you are supposed to be reporting NEWS! This is news.
http://www.npr.org/2014/01/22/264528139/long-a-dirty-word-gentrification-may-be-losing-its-stigma
I agree. Gentrification makes neighborhoods more attractive and that leads to more stability and less turnover.
It also leads to higher rates of home ownership, and homeowners move less often than tenants.
Lower crime rates, better stores and restaurants, cleaner streets and better-maintained homes all help create a neighborhood that people are proud to be a part of. and the benefits cascade down to all income levels.
Homeowners move less often because of the massive, heartbreaking transaction costs 🙂
That’s certainly one factor. But there is also the emotional and financial investment you make in a home when you own it.
That’s a big part of why the government gives homeowners some decant tax breaks. the government knows that home ownership leads to more stable, committed people in safer, more vibrant communities.
Cleveland is not San Francisco. The bases of the linked article are anecdotes in areas with high rents and low vacancy rates like Washington DC and “research” in places with low rents and high vacancies like Cleveland.
Of course, homeowners benefit from rising property values (unless they cannot afford the rising property taxes). The linked article is superficial and only slightly pertinent to what is happening here.
The NPR piece is about research done on this issue. What is anecdotal at best is the reporting that says, “Gentrification is class warfare” without any basis other than listening to some loud voices. This is a complex matter. It is not new. To dismiss research in favor of unsourced, unsupported assumption is your right as a naive commenter, but it is not journalism, and Mission Local is supposed to do journalism.
Despite your name calling, I stand by my comment. The article cited research from Cleveland, where there are low rents and high vacancy rates, so of course some renters can move to “better” neighborhoods within the city until conditions improve. That situation hardly exists in San Francisco with high rents, low vacancies and a current hyper-inflated market.
In addition, the article states that research shows that in gentrifying neighborhoods in NYC, low income renters who do not have rent-stabilized apartments are displaced, which is similar to what is happening in San Francisco.
The rest was fluff about a person in Washington DC and a historical inaccuracy that claims that gentrification became an issue in 1988.
I am all for good journalism and research, but the article you linked is neither.
And the good research and serious journalism about San Francisco is not to be found here.
You got me this time about the scope of the research of the Cleveland based study. But how good could the conclusions be from a study that considers such divergent cities as St. Louis and San Francisco as “gentrifying?” There are many depressed markets with high vacancy rates included in even the upper half of the list. Also, the time period of the study is 2000-2007, which corresponds almost identically with the housing bubble, further bringing doubt to its findings.
The cited article didn’t say that the research was done in Cleveland, but was done by a bank in Cleveland. That indicates, to me anyway, that they consider a range of locations and found a pattern across them. The article states:
That squares with a recent study by the Federal Reserve Bank of Cleveland.
“We’re finding that the financial health of original residents in gentrifying neighborhoods seems to be increasing, as compared to original residents in nongentrifying, low-priced neighborhoods,” says Daniel Hartley, a research economist with the bank.
If you’re comparing NY rents to SF rents, then you should compare Harlem to Bayview and not to prime SF, which is better compared to rents on the upper east side of Manhattan.
The good news, from that Chronicle article you cited, is that the average rent in Oakland is about $1,600 or almost exactly half the average SF rent of $3,256.
So just as those who cannot afford the upper east side look instead at places like Harlem, so perhaps those who cannot afford prime SF rents should be looking at Bayview or Oakland?
We can’t all afford Pacific Heights. And increasingly we cannot all afford the Mission. Cut your cloth to suit your pocket.