The SF rental market is in flux—here’s what you need to know

If you measure rebounds by rental prices, especially in San Francisco, it’s too soon to tell. Zumper, which represents citywide data across all rentals listed in the city, recorded a rise in average price per room of 2.2% from April to June. Bungalow, which rents rooms only in prime neighborhoods (where vacancies are lowest and the market is rebounding most quickly), recorded a 3.7% increase during the same period, indicating that the city’s most desirable neighborhoods maintained their appeal. 

 In March 2020, as the pandemic still seemed like a two-week inconvenience to most of the nation, rents in tech-intensive cities had been growing 2.8% year-over-year. According to the Realtor.com data, by May of 2021 most of the nation’s largest cities had recovered their prior monthly rental rates. By May in San Francisco, which felt the Covid-related disruption more harshly than most other cities, rents were still between 9 and 12% lower than their 2019 highs.

A couple of factors separate San Francisco’s scenario from the recovery scenario of other big cities, like New York City, Boston, and Washington D.C. While San Francisco’s rents didn’t experience rental price swings that were quite as drastic as New York’s, it also didn’t see a population that specifically intended to return when the pandemic had abated, as New York did.

According to U.S. Postal Service and U.S. Census data, in the country’s 50 most populous cities, 84% of the people who moved relocated within their own metro area, and most who moved rather stayed within 150 miles. San Francisco and San Jose, with the largest percentage of people who belong to the so-called “untethered class,”—or those who don’t need to work in an office outside their home—lost a higher percentage of residents to permanent moves than New York.

In the Bay Area, since the moves were more likely to be to a close-by metro area, home prices in cities like Sacramento have spiked. Would-be buyers are finding themselves priced out of the market, and more people are opting to rent. San Francisco’s renter population was already high—56%—so it’s possible that those who are returning to the city or settling around it will begin seeing the area’s rebound reflected in higher priced single-family rentals.

 For now, as analysts weigh the effects of Covid on urban centers, they’re finding that urban centers aren’t dead. “People are more mobile and have more flexibility than ever and we are seeing migration trends in our data, both for short term moves to experience a new city or longer-term moves to relocate,” says Andrew Collins, CEO of Bungalow. “But our demographic is energized by urban living and the access, innovation and networks urban hubs afford.  Major cities like New York and San Francisco will always epitomize this dynamism of urban living and we expect a full market recovery in these cities.”

 Bungalow is the best way to invest and manage your real estate portfolio. We work with you to identify, purchase, fill, and manage residential properties—so that you can enjoy up to 20% more in rental income with a lot less stress. Learn more about Bungalow.