News Real Estate

Rents in SF and Tech Hubs See Big Drop

SANTA CLARA — Rents in the nation’s tech hubs continued their descent in October, falling by one-third for a studio apartment in San Francisco year-over-year, according to a  monthly rental report from realtor.com. The report also showed that while the declines have begun to slow down nationally, renters are seeking both affordability and more space the longer they work from home.

Nationally, rental growth rates are still far below where they were pre-COVID, but declines are starting to lessen.

The median studio unit rent in October was $1,316, down 0.8% year-over-year. The median one-bedroom rent in October was $1,495, up 1.1% year-over-year. The median two-bedroom rent continued to increase in October.  At $1,869, it was up 2.6% year-over-year, approaching its pre-COVID annual growth rate of 3.5%.

“The combination of tech companies extending their work from home policies through mid-2021 or even indefinitely, and the desire for more space, especially with the weather cooling, is putting pressure on rents in the most expensive urban metros and tech hubs,” said realtor.com Chief Economist Danielle Hale. “Just as we saw with buyers, many renters appear to be looking to escape their urban life altogether, while others are looking for more space. Nationwide, rents for two-bedroom units have begun to bounce back and if the trend continues, price growth could return to pre-COVID levels early next year.”

San Francisco led the nation in declines with monthly rents falling 33.3%, 26.3% and 23.4% for studio, one-bedroom and two-bedrooms units year-over-year, respectively. Rents for studios and one-bedrooms in nearby Santa Clara and San Mateo counties also saw double-digit decreases in October.

Outside of the Bay Area, ManhattanBostonSeattle, and Washington, D.C. were among the metros seeing the largest year-over-year declines. These markets also represent some of the most expensive cities in the country, giving rents the most room to fall.

In October, the median studio rent in Manhattan was $2,395, down 20.0% year-over-year, accelerating from 15.4% a month earlier. One-bedroom rents in Manhattan were $3,250,  down 16.7% compared to last year, and accelerating from a decrease of 11.7% in September. Two-bedroom rents in Manhattan were $5,333 in October, down 11.1% compared to last year, accelerating from a 4.1% decline a month earlier.

Top 10 markets with largest one-bedroom rent decreases in October

Rank

County

Median Rent

YoY Percent Change

1

San Francisco, Calif.

$2,800

-26.3%

2

New York, N.Y.

$3,250

-16.7%

3

San Mateo, Calif.

$2,541

-13.7%

4

Suffolk, Mass.

$2,585

-13.0%

5

King, Wash.

$1,777

-12.0%

6

Santa Clara, Calif.

$2,454

-11.9%

7

District of Columbia, D.C.

$2,125

-9.6%

8

Middlesex, Mass.

$2,226

-8.8%

9

Honolulu, Hawaii

$1,700

-8.1%

10

Cook County, Ill.

$1,650

-7.4%

Top 10 markets with largest two-bedroom rent decreases in October

Rank

County

Median Rent

YoY Percent Change

1

San Francisco, Calif.

$3,810

-23.4%

2

New York, N.Y.

$5,333

-11.1%

3

Suffolk, Mass.

$3,305

-10.7%

4

Santa Clara, Calif.

$3,001

-10.5%

5

San Mateo, Calif.

$3,350

-9.9%

6

District of Columbia, D.C.

$3,000

-7.1%

7

Erie, N.Y.

$1,183

-6.9%

8

Middlesex, Mass.

$2,748

-6.5%

9

Fairfax, Va.

$1,995

-5.2%

10

Dallas, Texas

$1,513

-4.8%

Methodology: Rental units include apartment communities as well as private rentals (condos, townhomes, single-family homes). National rents were calculated by averaging the medians of the 100 largest counties, except for studios, which were based on 94 of those counties with at least 20 studio listings.