The average asking rent for an apartment in San Francisco held steady at $3,057 a month in the first quarter of 2014, down 1 percent from a peak of $3,096 in the third quarter of 2013, but still 10 percent higher year-over-year and 38 percent higher than in 2010, according to Cassidy Turley.

The average asking rent for a studio in San Francisco is $2,382 (down from a peak of $2,422) and the average asking rent for a one-bedroom is $2,934 (relatively unchanged from a peak of $2,950).

At the same time, the apartment vacancy rate in San Francisco dropped from 4.5 percent at the end of 2013 to 3.8 percent today. Note the slide in rents despite a lower supply.

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Comments from “Plugged-In” Readers

  1. Posted by unwarrantedinlaw

    Last month I had some apartments come vacant, and I had kind of a hard time re-renting them, it took longer and I had to reduce rent. I think there’s been a bigger drop in rent than the statistics show. Certainly the news articles about how crazy the rental market is are exaggerated. I suppose it could just be that I hit a weird month as maybe April is a bad month to rent. But I think there’s a lot more availability at lower prices than people realize.

  2. Posted by curmudgeon

    This is not unexpected. New rental product continues to come on the market and is absorbing some of the demand. Interesting to see Two Rincon begin to market their units, months before actual occupancy.

  3. Posted by poor.ass.millionaire

    ^ as rentals? I thought those were for sale condos.

  4. Posted by SFHelmut

    I had a unit go vacant 2 weeks ago in cole valley, one bedroom, good condition, top floor, views, no parking. Previous tenant had been there 2 years and paid just under $1,700. New people have signed the lease for $2,700. I week to paint and do some light remodeling (new appliances, floor, odds and ends) 6 days to show and sell.
    Market seems good to me.

  5. Posted by lol

    2700 in Cole Valley? Sounds very reasonable. Beware of underpricing. This is how rent control horror stories begin.

  6. Posted by curmudgeon

    Two Rincon is rentals.

  7. Posted by SFhelmut

    Depends on what you mean my rent control horror story. If you mean a tenant that stays for 20 or 30 years and ends up playing 50-75 percent below market, I would say I have about 15-20 of those already.
    But instead of thinking about how much money I could make if they were paying today’s prices, I think how nice it is to have buildings at between 12 and 20 GRM, and for every $1.00 in increased monthly cash flow I generate between $144 and $240 in property value.
    And that is a good thing.

  8. Posted by lol

    property value would increase nevertheless I think.
    But the money you leave on the table today: you’ll never see it back.
    Worse: if you want to buy out a tenant you will provide him with a few years of rent compensation which will increase by the amount you undercharged. And with the upcoming Ellis punishing fees, this will be mandatory.
    Back of the envelope calculation:
    May 2014 you rent 2700 a unit valued 2900.
    20 years later rent is 3800. It could have been 4100. You lost out on 60,000 in revenue over 20 years.
    But market rent at that time is 7500. Who knows? Compared with market rent your loss for 20 years is in the range of $400,000 (average of 1700/month deficit * 240).
    Your life circumstances have changed and now you (or your heirs) want to evict but the tenant asks you for 3 years rent difference. You’ll have to pay out 300*12*3 = 10800 more than if you had applied the higher rate.
    You probably make it up with scale and most likely do not need the money. But rent control is punishing enough to leave even more money on the table.

  9. Posted by SFHelmut

    How exactly do you know that the unit is 2700 and not 2900. There is no book somewhere where the price of a unit is written down. You survey, set a price, see if qualified people show up and then make a deal. Sitting around worrying if a unit is priced at 2700 or 2900 is silly, lets pretend you are write and you struggle to get those last 200 dollars, and in the process take a month to write a deal that you could have had done in a week. It will take a year to make up the income over those loss three weeks.
    The 20 year example is stupid. You can never know which people will be there 3 years and which ones will be there 20. In the real world you make as good a decision as you can with the information you have, and put the back of the envelope math in the recycling.

  10. Posted by lol

    Yeah, I know what you mean. I had a unit sitting for 1 month in the old country and lowered it by 100 Euros before I got serious interest. 100 fearing Euros and 2000 euros in lost rent.
    Statistically you know my 20-year scenario happens. Heck a few years back I had been shopping for buildings with value to extract. The value always took the shape of long-term tenants, often in all units, never paying more than 50% market rent. I didn’t have the heart to kick everyone out (and make the SFGATE’s front page) and backed off from buying. There were plain ridiculous situations, like estopels on 3 generations of tenants for a tenancy that had started in the 60s.
    Good for you you don’t need the couple of 1000 one single unit could cost you in underpriced rent. This is the kind of thing that would keep me up at night. I hate waste. This is why I do corporate-style airbnb. I sleep like a baby while collecting 125% market rent after the downtime is taken out.

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