6 ms·

Looks like people are really leaving the Bay Area. you don't see 10-15% price drops in a year without corresponding drop in demand.

Finnucane 6y ago
Also, a drop in money, as in, a lot of people suddenly don't have any. And not just people leaving, but people not moving in.
- driverdan 6y ago
  The majority of people who lost income are not the ones buying real estate in the bay.
  - cameronbrown 6y ago
    But everyone buying real estate in the Bay Area needs a functioning economy to stay afloat themselves.
  - throwaway1777 6y ago
    The article is about rental prices, not purchase.
nostrademons 6y ago
Yeah. I was driving through Mountain View & Palo Alto yesterday and basically every apartment complex has a "For lease!" sign on it, many with generous move-in specials. The steady stream of moving vans leaving the area hasn't abated, either - it's the end of month, and I've heard at least 3 of them being loaded up in my neighborhood in the last day. I suspect rents are going to fall further, too, because there are still a lot of vacancies. They're down maybe $200 on a $2000/mo 1BR, which is a lot in percentage terms but is still an awfully high rent when about 20% of units are vacant.
shuckles 6y ago
I guess they’re moving to Oakland, where rents were up 5% YoY.
makomk 6y ago
I suspect a lot of people are going to be leaving major cities in the next few months, especially in the US.
mertd 6y ago
Lots of employers are remote until the end of the year. There is no good reason to renew or get into a new lease right now. It won't be clear whether rent drop is a real change until things are back to more normal.
cbsks 6y ago
Perhaps supply is increasing because owners are converting short term AirBnB's into long term rentals?
MajorBee 6y ago
Might also be that people are preferring to not move in the coming months (thanks to COVID-19) and so the units that _are_ on the market simply aren't finding many buyers. I'm actually looking for a new place in the Bay Area next month -- some units have their sticker price uncharacteristically low for sure; many have some kind of specials running too, like first month rent free. I asked a few leasing reps if this is due to the current situation and they invariably say these specials have always been in place off-and-on throughout the years, but perhaps that is just a convenient statement to convince prospective tenants that their "desirability" is quite inert to general market conditions?
- guenthert 6y ago
  No, first month free or similar incentives has been common for at least fifteen years in the Bay Area. It's sadly also not uncommon that the first lease is considerably lower than following ones (for no other reason than the landlord betting on the inertia of the tenant).
  - gregwebs 6y ago
    First month free has definitely been around at times, but I think less so in the most recent pre-COVID years. This article mentioned we might start seeing 2 months though, which I think is much rarer. My complex charges existing tenants greater than 5% more than new ones because they know that few people want to go through the pain of moving out. I haven been able to use the obviousness of this to keep negotiating the "new tenant" rate with them.
  - deleted 6y ago
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- deleted 6y ago
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hkmurakami 6y ago
Supply increased significantly due to condo and SFH owners opting to wait it out until 2021 rather than test the sales market (listed as rental and willing to offer competitive prices since they’re sensitive to vacancies). This is driving the General strength in sales pricing for Bay Area housing. Demand for buying has come back strong in May while supply’s return is slow. I do see listings picking up in the last 2 weeks. Summer will be interesting.
- yodon 6y ago
  Can you explain more about this?
  - Stanleyc23 6y ago
    I believe they are contrasting the supply of property used for real estate sales vs for rentals. Owners that would have put their properties on the market are supposedly holding off on selling and instead listing them as rental units. An increase in availability of rental units would drive down the price of an apartment.
- arbitrary_name 6y ago
  And don't forget the impact to demand of university enrollment. Very interested to see what will happen to rents around Palo Alto once the Stanford grad residences are complete and Stanford finalizes its plan to resume the fall and winter quarters.
xyzzy_plugh 6y ago
As an anecdote, I left the Bay Area (and California (and the USA)) in January. Amongst my cohorts/closest friends I know in the Bay Area: - one moved to Colorado a year ago. - another moved to Berkeley from SF, to buy a house. - several moved to New York City and Seattle. - a few moved back to Canada. In my time in the Bay Area, it always seemed like there was constant migration: some folks leaving, some folks just arriving. Usually more of the latter. Due to the current pandemic, I'd definitely guess that the rate of folks leaving hasn't changed significantly (compounded with layoffs, etc.) but the rate of folks arriving certainly has! No interns are flying out, no recent grads are moving in. If things "return to normal" then I'd expect this to revert, but those people aren't just milling about waiting for the gates to open. They're finding other opportunities, and when the dust settles, the opportunities in the Bay Area aren't going to be the highly competitive opportunities they once were.
- CydeWeys 6y ago
  Don't underestimate how many extra people are now leaving because they are working from home for the indefinite future and can get a lot more for their money (and lower SALT) elsewhere. I'm in NYC and we are strongly considering moving out when our lease expires in July. Google NYC isn't reopening at least through the end of the year so it doesn't make sense to continue paying a lot to live in a one bedroom apartment that is sub-optimal for multiple people to work from, especially while most of the typical amenities of city life are closed. The main reason I lived here was for a short commute and that's irrelevant now.
- gpm 6y ago
  New grad anecdote: If not for Covid I'd be in Palo Alto right now. Instead I'm buying furniture to set up an office in my parents basement in Toronto. My sister and her fiance already grabbed the extra room on the first floor for the same thing (otherwise they'd be in two different cities with apartments). All three of us are sort of "just milling around waiting for the gates to open". Not literally, any of us could technically be in the city our workplace is in today (the border isn't closed to work related travel), but we are waiting to be required to show up in person at the office before we move (back). In the meantime we'd rather be here where we have lots of space, good company, no rent, and so on.
onlyrealcuzzo 6y ago
As a not small anecdote, I live in a new building in Mountain View -- about 300 units. When I moved in last Summer, there were only 4 units available. It's currently over 50% vacant. My rent was $4300. They're currently renting the same unit on a higher floor for $3500.
- jedberg 6y ago
  > My rent was $4300. They're currently renting the same unit on a higher floor for $3500. You should ask them to lower your rent to $3500. Then ask if you can move in upstairs.
  - reaperducer 6y ago
    He probably can at the end of the lease, but usually not in the middle. I've done it, but it seems to take an open-minded management company. It also depends on things such as how much money/time/effort the landlord want to put into "turning" an apartment, the number of corporate long-term rentals a complex has, what the landlord thinks is going to happen in the near future, and even what property management software the apartment complex runs.
    - jedberg 6y ago
      He said he moved in last summer, so I assume he's near the end of his lease.
    - onlyrealcuzzo 6y ago
      Right, I asked. And they literally laughed at me, which is what I expected.
      - ivalm 6y ago
        Then move elsewhere nearby and lock in a rent controlled lower value.
        6y ago
deet 6y ago
I live across from a high rise in downtown SF, can see clearly into over 200 units in that building (mostly studios and one bedrooms), and have been taking pictures over the past few months to track vacancy. In early March it appeared to be ~2%. Now I count over a 10% vacancy rate. Definitely seems like a real drop in demand.
dmode 6y ago
You could also see a price drop for many reasons - increased supply [which is happening], failed IPOs, reduced incomes etc. Last year, a ton of apartment supply came on the market, with 10K units in Oakland alone
ccktlmazeltov 6y ago
The prices I'm seeing right now on craigslist are tending more towards 30-50% decrease, not 10-15% It is pretty insane, I don't see why anyone wouldn't move to a new place. The only thing that is making me think twice is that I'm in a rent controlled place right now and there's no way I would move to a non-rent controlled place.

Finnucane 6y ago

Also, a drop in money, as in, a lot of people suddenly don't have any. And not just people leaving, but people not moving in.

driverdan 6y ago
The majority of people who lost income are not the ones buying real estate in the bay.
- cameronbrown 6y ago
  But everyone buying real estate in the Bay Area needs a functioning economy to stay afloat themselves.
- throwaway1777 6y ago
  The article is about rental prices, not purchase.

nostrademons 6y ago

Yeah. I was driving through Mountain View & Palo Alto yesterday and basically every apartment complex has a "For lease!" sign on it, many with generous move-in specials. The steady stream of moving vans leaving the area hasn't abated, either - it's the end of month, and I've heard at least 3 of them being loaded up in my neighborhood in the last day. I suspect rents are going to fall further, too, because there are still a lot of vacancies. They're down maybe $200 on a $2000/mo 1BR, which is a lot in percentage terms but is still an awfully high rent when about 20% of units are vacant.

shuckles 6y ago

I guess they’re moving to Oakland, where rents were up 5% YoY.

makomk 6y ago

I suspect a lot of people are going to be leaving major cities in the next few months, especially in the US.

mertd 6y ago

Lots of employers are remote until the end of the year. There is no good reason to renew or get into a new lease right now. It won't be clear whether rent drop is a real change until things are back to more normal.

cbsks 6y ago

Perhaps supply is increasing because owners are converting short term AirBnB's into long term rentals?

MajorBee 6y ago

Might also be that people are preferring to not move in the coming months (thanks to COVID-19) and so the units that _are_ on the market simply aren't finding many buyers. I'm actually looking for a new place in the Bay Area next month -- some units have their sticker price uncharacteristically low for sure; many have some kind of specials running too, like first month rent free. I asked a few leasing reps if this is due to the current situation and they invariably say these specials have always been in place off-and-on throughout the years, but perhaps that is just a convenient statement to convince prospective tenants that their "desirability" is quite inert to general market conditions?

guenthert 6y ago
No, first month free or similar incentives has been common for at least fifteen years in the Bay Area. It's sadly also not uncommon that the first lease is considerably lower than following ones (for no other reason than the landlord betting on the inertia of the tenant).
- gregwebs 6y ago
  First month free has definitely been around at times, but I think less so in the most recent pre-COVID years. This article mentioned we might start seeing 2 months though, which I think is much rarer. My complex charges existing tenants greater than 5% more than new ones because they know that few people want to go through the pain of moving out. I haven been able to use the obviousness of this to keep negotiating the "new tenant" rate with them.
- deleted 6y ago
  [deleted]
deleted 6y ago
[deleted]

hkmurakami 6y ago

Supply increased significantly due to condo and SFH owners opting to wait it out until 2021 rather than test the sales market (listed as rental and willing to offer competitive prices since they’re sensitive to vacancies). This is driving the General strength in sales pricing for Bay Area housing. Demand for buying has come back strong in May while supply’s return is slow. I do see listings picking up in the last 2 weeks. Summer will be interesting.

yodon 6y ago
Can you explain more about this?
- Stanleyc23 6y ago
  I believe they are contrasting the supply of property used for real estate sales vs for rentals. Owners that would have put their properties on the market are supposedly holding off on selling and instead listing them as rental units. An increase in availability of rental units would drive down the price of an apartment.
arbitrary_name 6y ago
And don't forget the impact to demand of university enrollment. Very interested to see what will happen to rents around Palo Alto once the Stanford grad residences are complete and Stanford finalizes its plan to resume the fall and winter quarters.

xyzzy_plugh 6y ago

As an anecdote, I left the Bay Area (and California (and the USA)) in January. Amongst my cohorts/closest friends I know in the Bay Area: - one moved to Colorado a year ago. - another moved to Berkeley from SF, to buy a house. - several moved to New York City and Seattle. - a few moved back to Canada. In my time in the Bay Area, it always seemed like there was constant migration: some folks leaving, some folks just arriving. Usually more of the latter. Due to the current pandemic, I'd definitely guess that the rate of folks leaving hasn't changed significantly (compounded with layoffs, etc.) but the rate of folks arriving certainly has! No interns are flying out, no recent grads are moving in. If things "return to normal" then I'd expect this to revert, but those people aren't just milling about waiting for the gates to open. They're finding other opportunities, and when the dust settles, the opportunities in the Bay Area aren't going to be the highly competitive opportunities they once were.

CydeWeys 6y ago
Don't underestimate how many extra people are now leaving because they are working from home for the indefinite future and can get a lot more for their money (and lower SALT) elsewhere. I'm in NYC and we are strongly considering moving out when our lease expires in July. Google NYC isn't reopening at least through the end of the year so it doesn't make sense to continue paying a lot to live in a one bedroom apartment that is sub-optimal for multiple people to work from, especially while most of the typical amenities of city life are closed. The main reason I lived here was for a short commute and that's irrelevant now.
gpm 6y ago
New grad anecdote: If not for Covid I'd be in Palo Alto right now. Instead I'm buying furniture to set up an office in my parents basement in Toronto. My sister and her fiance already grabbed the extra room on the first floor for the same thing (otherwise they'd be in two different cities with apartments). All three of us are sort of "just milling around waiting for the gates to open". Not literally, any of us could technically be in the city our workplace is in today (the border isn't closed to work related travel), but we are waiting to be required to show up in person at the office before we move (back). In the meantime we'd rather be here where we have lots of space, good company, no rent, and so on.

onlyrealcuzzo 6y ago

As a not small anecdote, I live in a new building in Mountain View -- about 300 units. When I moved in last Summer, there were only 4 units available. It's currently over 50% vacant. My rent was $4300. They're currently renting the same unit on a higher floor for $3500.

jedberg 6y ago
> My rent was $4300. They're currently renting the same unit on a higher floor for $3500. You should ask them to lower your rent to $3500. Then ask if you can move in upstairs.
- reaperducer 6y ago
  He probably can at the end of the lease, but usually not in the middle. I've done it, but it seems to take an open-minded management company. It also depends on things such as how much money/time/effort the landlord want to put into "turning" an apartment, the number of corporate long-term rentals a complex has, what the landlord thinks is going to happen in the near future, and even what property management software the apartment complex runs.
  - jedberg 6y ago
    He said he moved in last summer, so I assume he's near the end of his lease.
  - onlyrealcuzzo 6y ago
    Right, I asked. And they literally laughed at me, which is what I expected.
    - ivalm 6y ago
      Then move elsewhere nearby and lock in a rent controlled lower value.
      - 6y ago

deet 6y ago

I live across from a high rise in downtown SF, can see clearly into over 200 units in that building (mostly studios and one bedrooms), and have been taking pictures over the past few months to track vacancy. In early March it appeared to be ~2%. Now I count over a 10% vacancy rate. Definitely seems like a real drop in demand.

dmode 6y ago

You could also see a price drop for many reasons - increased supply [which is happening], failed IPOs, reduced incomes etc. Last year, a ton of apartment supply came on the market, with 10K units in Oakland alone

ccktlmazeltov 6y ago

The prices I'm seeing right now on craigslist are tending more towards 30-50% decrease, not 10-15% It is pretty insane, I don't see why anyone wouldn't move to a new place. The only thing that is making me think twice is that I'm in a rent controlled place right now and there's no way I would move to a non-rent controlled place.