San Francisco rental prices experienced the biggest decline in all three of its categories: studio, one-bedroom and two-bedroom: nationwide year-over-year, according to a September rent report by the website Realtor.com.
Changes in remote work policies during the coronavirus epidemic are increasing the trend toward falling into expensive urban areas across the nation, particularly in tech-heavy rental markets such as the Bay Area.
“What we’re seeing is actually away from high costs, especially in urban cities, towards the suburbs and affordability,” said Realtor.com senior economist George Ratiou. “There are a good number of companies, and San Francisco is a leader in this, recognizing the tremendous burden, and tech companies were among the first to announce expanded remote work policies over the next year.”
Workers were able to move out of high-cost rentals closer to their workplaces in San Francisco and Silicon Valley, in more affordable rental areas, or in larger properties in quiet neighborhoods and with facilities such as a home office or home gym, Ritu . said.
According to Realtor.com, median rental prices for studio apartments in San Francisco dropped 31% year-over-year to $ 2,285 in September. The average price for a one-bedroom apartment fell 24.2% to $ 2,873 and for two-bedroom units dropped 21.3% to $ 3,931. Apartment List and Jumper recently released similar findings in their September rental reports.
San Mateo and Santa Clara counties were behind San Francisco, which was in the top four for all three categories of rent declines. Santa Clara’s studio apartment rental prices declined the third largest nationally, down 19.2%, and San Mateo’s fell 17.6% to fourth. Alameda also made the list, coming in 10th with a 12.1% decrease in studio rental prices.
For one-bedroom apartments, San Mateo was second on the list of lowest declines with rents shrinking 12.5%. Santa Clara came in third place with a drop of 12%. San Mateo and Santa Clara fell 11.1% and 9.2% in median two-bedroom rents, respectively.
By comparison, Realtor.com found that among the 100 largest US counties, median studio rent was $ 1,347, up 0.5% year-over-year; The median for a one-bedroom was $ 1,502, up 1%; And the average rent for a two-bedroom unit was $ 1,873, up 2.3%.
Ratiu said that it is not surprising to see strong migration towards affordability in San Francisco and Silicon Valley where, before the epidemic, many people were prepared to pay a premium to stay close to their places of employment. He said that at least in the next year, he expects the San Francisco rental market to continue to soften, especially as employers see the positive side of remote work.
“We have seen too many companies … start realizing that remote work has now proved to be a very viable business,” he said. “Companies are also assuming that it is difficult for many employees to meet … so they are taking advantage of geographic spread and setting up offices in low-cost areas.”
Ratiu said he thinks many companies will adopt a hybrid approach, where office workers spend their time in the office, and another part will work remotely.
For its rental report, Realtor.com examines apartment communities and units including private rentals, such as condos, town homes, and single-family homes. National rents are calculated from average average rental prices for the 100 largest US counties, excluding studios, which are based on 80 of the counties with at least 20 listings.
Realtor.com, under a license of the National Association of Realtors News Corp. The subsidiary is operated by Move Inc.