Plummeting rents in Bay Area market favor luxury seekers

SAN FRANCISCO, CA - JAN. 14: Mykhailo Achey, an IT consultant who moved into better housing in San Francisco, Calif. during the pandemic, takes in the balcony view from his downtown highrise, Thursday, Jan. 14, 2021. (Karl Mondon/Bay Area News Group)

Three months’ free rent on a 2-bedroom apartment with a pool in West San Jose. A Lake Merritt studio in Oakland at a 50% discount for the first six months. Two months of “complimentary rent plus a $2,000 MasterCard gift card” on a luxury high rise renting for $4,375 a month in San Francisco’s Potrero Hill neighborhood.

Deals on high-end apartment rentals in the Bay Area are blowing up.

“We ended up saving about $2,000 a month and got a better apartment,” said Julian Jacobson, an account executive who moved into a new place in Russian Hill with his girlfriend in September, catching a 2-months-free rent deal on a bigger, better-located apartment without even having to put down a security deposit. “I get to wake up every day and see the Golden Gate and Alcatraz. I have to pinch myself.”

As residents seeking more space and cheaper locations continue to empty out of their Bay Area apartments, rents in the region have kept falling. In San Francisco, rents dropped 26.7% since March — the highest dip in the country and more than four times the statewide decline of 6%, according to a recent analysis by Apartment List. In Santa Clara, prices are down 17.8% and in Oakland, 14.2%, the company’s data shows.

“Vacancy is through the roof,” said Sid Lakireddy, president of the California Rental Housing Association. “The market’s beaten up.”

Now, some owners in San Jose, Oakland and San Francisco are offering big deals to lure new renters.

“We moved around the block and why we did it? We doubled the size of our apartment at no extra cost,” said Mykhailo Achey, an IT consultant who moved with his girlfriend in July into a new $5,000-a-month high-rise apartment in San Francisco.

But others in the notoriously expensive Bay Area say they’re not seeing prices drop for them. That’s because the really good deals, experts say, are happening at the top of the market.

“These big 25% rent drops, those are going to be the high-rent units, places like new luxury apartments that were built around BART stops over the last few years,” said Igor Popov, chief economist at Apartment List. Even in this once-in-a-decade market, Popov said, low-income renters probably won’t find housing for less. 

Judith Gips, a substitute teacher who has been paying $400 a month for a room in San Francisco since 2015, has been looking. But she’s not finding any bargains on her budget. “One place I was looking at has gone up $100,” Gips said. “It’s really frustrating. Sharing housing is difficult for somebody who’s over 60.”

Last spring, the California Department of Housing and Development estimated that the Bay Area has 441,000 fewer affordable housing units than it needs. The pandemic hasn’t widened that supply, owners and experts say.

“I don’t see any weakness. In fact the [affordable housing] market seems to be as as strong as it always has been,” said Ray Harper, economist at Dwell San Jose, owner of three affordable housing projects in the South Bay.

Some smaller landlords with high vacancy rates or who aren’t collecting as much rent as usual are also struggling.

“I have units in Oakland and we can’t get people to show up. No one’s moving to the Bay Area,” Lakireddy said, adding that some owners of less expensive units have lowered prices too. “But you can only drop it so far.”

Meanwhile, Jacobson has referred three other couples looking for deals to the rental agency who found him his new place, RentSFNow. “Had we not taken advantage of moving when we did, I don’t think that we’d be able to afford a place like this,” he said. “What more can you ask for?”

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