Rent prices in top cities are down “substantially” compared to last year — especially in San Francisco, according to Realtor.com.
City landlords are slashing rent prices to attract tenants as they lose renters to cheaper, quieter suburbs during the coronavirus pandemic. In the most dramatic cities studio rent prices fell 31% compared to last year, according to Realtor.com’s September rent prices report.
“This is likely a reflection of people with flexibility, like renters, choosing to relocate elsewhere or even possibly move in with friends and family to save money in a period of economic uncertainty, with flexibility that changes like remote work have allowed them to move elsewhere to places that are more affordable,” said Danielle Hale, chief economist at Realtor.com.
San Francisco rent prices were the hardest-hit by the pandemic as big tech companies in Silicon Valley required or allowed workers to work remotely — first during lockdowns, and then long-term, in many cases.
The median studio apartment in San Francisco is going for 31% less than it did last year, now only $2,285. One bedroom apartments cost 24.2% less than last year at only $2,873 a month (the first time they’ve ever hit under $3,000, according to Zumper, a San Francisco-based listing company). In nearby San Mateo, Santa Clara and Alameda rents dropped 9%-19%. Rents were less volatile for larger apartments, the Realtor.com study found.
But almost two hours outside San Francisco in Sacramento, rent prices are actually rising 10%-16%. Sacramento was the top out-of-metro location where Bay area renters searched for apartments year-to-date, according to Zumper’s 2020 migration report. Sacramento was also tied as the sixth most common migration destination in the country, according to Opendoor, a San Francisco-based iBuyer that operates in Sacramento and 20 other markets.
“People from the Bay area may be moving to Sacramento if they don’t have to commute into the office every day,” said Hale.
Pushing for occupancy before seasonal slowdown
Rent prices dropped significantly in major cities all across the country, plummeting up to 15% for studio apartments in places like New York City, Pittsburgh, Boston and Honolulu, and 12% in Seattle, according to Realtor.com. Rent cuts were less steep for one-bedrooms, between 7% and 12% in most cities.
“Apartment owners are pushing to get occupancy as high as possible before leasing activity suffers the seasonal slowdown that occurs during the cold weather months,” said a statement by Greg Willett, chief economist of RealPage, a Texas-based property management software company. “In some cases, they are cutting rents in an attempt to capture bigger shares of total demand.”
Meanwhile, rent rose in unlikely places such as Tulsa, Okla., which had a staggering 36% hike in studio rent increases. Rent in suburbs that many Americans have never heard of, like Hillsboro, Fla., Montgomery, Pa. and Essex, N.J., rose about 19%-29%.
“Even prior to the pandemic, there was a movement from larger metros to smaller metros…,” said Odeta Kushi, deputy chief economist for First American Financial Corporation, a California-based title insurance, settlement services and risk solutions company. “This trend has been accelerated by the pandemic as younger households look for more space and are increasingly able to work from home.”