We have all read about how crazy the San Francisco real estate market has been this year. Rents have been spiking due to both enormous demand, fueled by the ‘silicon migration’ of tech employees to the Bay, and also by continued limitations in supply, with only a handful of the apartment buildings under construction delivered to market in 2014.
We at Zumper have witnessed this trend both as a tech company powering tens of thousands of renter inquiries each week, but also as renters ourselves in the Bay Area. We wanted to dissect the data to understand where this price growth was being felt most acutely, and so we compared the median rents for 1 bedroom houses and apartments for rent at the end of 2014, to the beginning of the year, and broke down this trend across San Francisco’s neighborhoods.
The results are really interesting.
At a high level, the data overwhelmingly confirms your suspicions – San Francisco’s average 1 bedroom rents increased by 13.5% this year, and ended the year above NYC’s.
And there are some fascinating insights from the breakout by neighborhood.
Some of the most in-demand neighborhoods actually saw modest price drops this year; for example Nob Hill (-6.3%), Russian Hill (-4.3%), the Marina (-1.4%) and Pacific Heights (-1.4%). There were two main drivers.
First, in 2014 we saw some of the luxury multifamily buildings in Soma and elsewhere finally come online, providing these upscale residential neighborhoods with competition at the high end. For example Mosso and Nema started attracting young professionals away from the north of the city, and into luxury apartments closer to their offices.
Second, the neighborhoods in question had long led the charge in rent increases as some of the most prestigious areas of the city. In the wake of the America’s Cup in late 2013, they had enjoyed a particular run that – it turns out – wasn’t sustainable. This is not to say that these neighborhoods are now cheap – far from it – but they have hit somewhat of a pricing equilibrium, with several of our clients mentioning that their vacant inventory in these areas has started to build up for the first time in two years.
And yet while this was happening, we saw huge price increases elsewhere which drove the 13.5% price increase across the city.
New apartment developments and high demand in Soma (+9.4%) and the Mission (+20.0%) drove up these neighborhoods’ prices to record highs, now at $3,500 and $3,240 per month for a 1 bedroom apartment respectively. Noe Valley saw the largest increase, rising by a staggering 29.2%, a rise in popularity mirrored closely by the for sale market that also placed a huge premium on the family-friendly vibe of Noe.
You can find all the data for your own San Francisco neighborhood in our infographic, and you can check out the median prices for these areas right here.
We’ll be on top of all the rental market changes that happen in 2015. Like with SF’s toppling of NYC as the US’ most expensive city to rent, we’ll be the first to break any fresh rental news, so watch this space. And have a wonderful holiday season with your family.
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